Monday, October 19, 2015


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:
Under full retirement age
NOTE: One dollar in benefits will be withheld for every $2 in earnings above the limit.
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.

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”.


No comments: