By now, you probably know that for the second year in a row, there will be no Social Security cost-of-living adjustment (COLA) for 2011. At first, I shrugged in resignation (“what else is new these days?”) because it doesn't affect me much.
I may nearly pass out at the price of blueberries at the grocery ($4.99 for six ounces last week) but it is well offset by the amazingly low price of red bell peppers (89 cents each) at one of the stores I frequent. I take only one prescription drug, a generic I get for $5 a month and I doubt heating during the upcoming season could possibly cost as much in my new home in Oregon as fuel oil did in Maine's longer, frigid winters. So no COLA doesn't affect me much, assuming I remain healthy.
Then I looked into it further.
Although it is true that inflation in the past year has been generally flat, that isn't so for elders who spend a larger portion of their income on health care than younger people. Health care costs, according to the Bureau of Labor Statistics (BLS), are up 3.4 percent from a year ago.
The premium for my supplemental coverage increased three percent for 2010, and I don't know yet how much it will go up for next year. There is also a question of prescription drug coverage premiums for 2011. Last year, mine doubled and added a deductible. Then there are, of course, co-pays.
I'm sure you have stories of your own to tell about your health care costs.
Some good news for people whose drug costs are high enough to fall into the doughnut hole, there are no changes scheduled for 2011 except that a 50 percent discount on brand name drugs is now in effect during the doughnut hole period.
According to the National Committee to Preserve Social Security and Medicare (NCPSSM), beneficiaries now spend an average of nearly 30 percent of their Social Security income on Medicare Part B, Part D and out-of-pocket costs. Consider that the average Social Security benefit is $1172 per month which would leave $703.20 for everything else.
In that case, a 3.4 percent increase in health care costs, which doesn't sound like much, is devastating.
In addition, a study [pdf] by the Center for Retirement Research at Boston College reports that for people 65 and older in the lower third of income distribution, Social Security benefits account for 84 percent of their income which has an “enormous impact on whether households fall above or below the poverty line.”
Don't ever forget that no one ever got rich on Social Security. It is intended to provide for basic needs and for 75 years it has helped keep millions of beneficiaries from poverty.
Last year, Social Security beneficiaries received a one-time $250 additional payment. Among all the controversy about the federal stimulus package, the Economic Policy Institute reported in September that although its share of the Recovery Act was very small,
"...this lump-sum payment was one of the quickest-acting components of the overall package - the majority of payments were received just months after the Act was passed (by the end of May 2009).
“This Social Security and SSI payment by itself likely boosted GDP by roughly 0.5% in the second quarter of 2009, which would roughly translate to about 125,000 jobs created or saved due to these payments."
So what is good for elders is also good for the economy.
There is legislation in Congress that would grant another one-time Social Security benefit of $250 in 2011. Both House Leader Nancy Pelosi and Senate Leader Harry Reid have pledged to bring this to a vote after the November election, and President Obama has said he will press Congress for this stimulus.
Noting that “seniors are paying more for utilities and food, experiencing longer periods of unemployment, and spending more on health care and prescription drugs,” AARP has posted a form on their website you can use to urge your congress members to provide elders with “immediate relief.” You can use the letter as is, edit it or delete it and write your own.
At The Elder Storytelling Place today, Mimi Torchia Boothby: Zio Matteo