The Social Security Administration has announced that the "Law Does Not Provide for a Social Security Cost-of-Living Adjustment for 2016" -
“With
consumer prices down over the past year, monthly Social Security and
Supplemental Security Income (SSI) benefits for nearly 65 million Americans
will not automatically increase in 2016.
The
Social Security Act provides for an automatic increase in Social Security and
SSI benefits if there is an increase in inflation as measured by the Consumer
Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The period of consideration includes the
third quarter of the last year a cost-of-living adjustment (COLA) was made to
the third quarter of the current year.
As determined by the Bureau of Labor Statistics, there was no increase
in the CPI-W from the third quarter of 2014 to the third quarter of 2015. Therefore, under existing law, there can be
no COLA in 2016.”
This means that there will be no cost of living increase in the checks for Social Security beneficiaries
for 2016.
It also means that there will be no
change in the maximum amount of earnings subject to the Social Security
component of the FICA tax. The maximum
amount of wages subject to the 6.2% Social Security tax for 2016 remains at $
118,500. The maximum Social Security tax
withholding for 2016 will remain $7,347, and the maximum Social Security
component of self-employment tax for 2016 will remain $14,694.
Also unchanged is the earnings
limitations for those electing to begin receiving their benefits before full retirement
age, and for the first year that a recipient reaches full retirement age –
|
Retirement Earnings
Test Exempt Amounts:
|
2015
|
2016
|
|
Under full retirement age
NOTE: One dollar in benefits will be withheld for every $2 in
earnings above the limit.
|
$15,720/yr.
($1,310/mo.) |
$15,720/yr.
($1,310/mo.) |
|
The year an individual reaches full
retirement age
NOTE: Applies only to earnings for months prior to attaining full
retirement age. One dollar in benefits will be withheld for every $3 in
earnings above the limit.
There is no limit on earnings beginning the month
an individual attains full retirement age.
|
$41,880/yr.
($3,490/mo.) |
$41,880/yr.
($3,490/mo.) |
There is a change in the maximum
Social Security benefit – a decrease.
The maximum benefit for a worker retiring at full retirement age was
$2,663 per month for 2015, but will be $2,639 per month for 2016. A decrease in full maximum benefits occurs
when there is no COLA, but there is an increase in the national average wage
index.
As for Medicare Part B premiums -
“The
Department of Health and Human Services has not yet announced Medicare premium
changes for 2016. Should there be an
increase in the Medicare Part B premium, the law contains a “hold harmless”
provision that protects approximately 70 percent of Social Security
beneficiaries from paying a higher Part B premium, in order to avoid reducing
their net Social Security benefit.”
So the premium will remain the same
for 2016 for most Social Security beneficiaries.
Click here for a Fact Sheet on “2016
Social Security Changes”.
TTFN
