The following is a summary of an article from Investment News .com Oct. 2017 by Mary Beth Franklin. I think it is valuable and interesting information and wanted to pass it on.
Monthly Social Security benefits for more than 66 million Americans will increase by 2% in 2018, the largest increase in retirement and survivor benefits for workers and their families since 2012. The higher payments will begin in January.
The average retirement benefit will increase by $27 per month to $1404 per month next year. The maximum benefit for someone who retires at full retirement age in 2018 will be $2788 per month compared to $2687 per month this year.
The 2018 COLA marks the first significant increase in Social Security benefits in several years following a tiny 0.3% hike this year and no increase at all in 2016.
For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums next year. The new Medicare premiums for 2018 will be announced later this year.
MEDICARE PART B
The increase in Social Security benefits is only part of the COLA story. The size of the inflation adjustment also affects how much seniors pay for their Medicare Part B premiums next year, which are normally deducted from Social Security benefits.
Most beneficiaries are protected by a “hold harmless” rule that says the increase in their monthly Medicare Part B premiums, which pays for doctor’s visits and outpatient series, cannot exceed the dollar amount increase in their Social Security benefits.
With these changes in premiums many retirees who enrolled in Medicare before 2016 and who pay an average of $109 per month now could see a sizable jump in their premiums next year to $134 per month, offsetting much of the increase in their Social Security benefits for 2018. That will essentially leave most retirees with no increase in Social Security benefits for the third year in a row.
Some beneficiaries do not qualify for protection under the hold-harmless provision, including high-income enrollees and those seniors who are enrolled in Medicare but who do not receive Social Security benefits.
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