Social Security COLA for 2007

[Roland Slugg]

October 18, 2006

The Social Security Administration announced today a COLA increase of 3.3% in retirement benefits. The COLA will first apply to benefits earned for the month of December 2006, payable in January 2007.

The Medicare Part B monthly premium will be $93.50 in 2007, an increase of $5.00 from the 2006 premium of $88.50. New for 2007 is that beneficiaries with higher incomes (individuals with income exceeding $80,000 and married couples with income exceeding $160,000) will pay a higher Part B premium based on their income. [Source: www.ssa.gov ]

[Jiggers]

Medicare premium based on income!

October 18, 2006
New for 2007 is that beneficiaries with higher incomes (individuals with income exceeding $80,000 and married couples with income exceeding $160,000) will pay a higher Part B premium based on their income. [Source: www.ssa.gov ]

Just great, isn't it. That opens the door for other increases based on income: Since you have more money, a loaf of bread will now cost you $2.50 instead of $2.25, the regular price. A gallon of gas will now cost you $2.199 instead of $2.099. A hotel room will now cost you $125.00 instead of $115.00.

Those that don't have that income will pay the lower prices.

This needs to be stopped.

Just venting!

[Roland Slugg]

More on Medicare premium increases

In 2007, approximately 4 percent of Medicare Part B enrollees with higher incomes will pay a higher Part B premium based on their income. The income-related Part B premiums for 2007 will be $106.00, $124.70, $143.40, or $162.10, depending on the extent to which an individual beneficiary’s income exceeds $80,000 (or a married couple’s income exceeds $160,000), with the highest premium rates only paid by less than 1 percent of beneficiaries whose incomes are over $200,000 (or $400,000 for a married couple). A beneficiary who pays the highest income-related premium in 2007 would pay $1,945 per year in Part B premiums.

A complete table may be seen at:

http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1958

Curiously, the above web site contains a table, and the premiums in that table are all slightly different from the amounts quoted in the summary paragraph above.

The above web site fails to answer several questions regarding how SSA will know which medicare recipients to charge for higher premiums and which "high income" bracket to use. Since there is a one to two year lag time before SSA knows about someone's income, will the premium be based on a prior year's tax return? If a beneficiary's income goes up or down, how and when will he pay the additional premium due or receive credit, or a refund, for excess premiums paid? Does the term "income" refer to AGI, taxable income, or some other measure of "income?" How will an amended return affect the calculations if it changes a taxpayer's income from one high income bracket to another?

[Snaggletooth]

Slippery Slope?

Yes, I think so. Sluggo, good to hear from you and interesting post.

Unfortunately, I'm very much afraid this is just the beginning. Social Security Administration opens another door for social engineering. First - SS becomes taxable to higher income levels. Now - reduced checks for those with higher incomes. Jiggers is right - I really don't like where this is headed, but feel powerless to stop it.

Comment on the 3.3% increase too -- I don't know how many Senior citizens tell me they are on a "fixed income." Fact of the matter, they are the only group that is guaranteed a raise. One customer of mine is drawing appx $1400 per month and he will get a 3.3% raise. Is $1400 per month enough? Probably not, but this is a $17,000 1099-SSA, only partially taxable at best with NO payroll tax. Minimum wage earners in my town get a
W-2 for $10,712, and a $17,000 W-2 is probably average in rural Tennessee. The $17,000 is fully taxable and subject to 7.65% SS/Medicare.

Fact of the matter, almost EVERYONE is on a "fixed" income, even those who make a bunch of money.

[db05]

It is kind of odd that the government would raise SS benefits that much, especially with the fear of the SS system becoming extinct within the next decade -- an issue that politicians are not talking much about in their campaigns and debates for the Senate and the House. Now don't get me wrong, it is good to see our seniors have more cash available, but $30/month goes about as far as nowhere and will put a significant hurting on the SS fund. It almost seems like our so-called leader is purposely poisoning this system so that his plan for privatization will look more credible with the people, which always brings me to my theory: Take the cap off the SS taxable wage base and worries about future benefits will go away. I know the people who make over $93,000 don't want to hear or see that, but it is more efficient an economical than the alternative option. And theoretically, the SS tax rate could even be lowered by 1 point and it would still bring in more money than under our current law.

I am just throwing my views out here because I know you people take an interest in this subject and will share your ideas. Whether you agree or disagree is irrelevant, because it is a good topic for discussion overall.

[sea-tax]

The fact is that SS was never meant to be the only retirement that one had. It was meant to supplement your other investments.