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In a blog post a month ago, we discussed the possibility of no Cost of Living Adjustments (COLA) for Social Security benefits in 2016 and the harsh side effects to Medicare premiums this may cause for some people. Well, it became official on October 15, 2015 when the Social Security Administration officially announced the COLA for 2016 to be ZERO.
With a zero cost of living adjustment to consider, I would like to highlight a few aspects of Social Security in 2016 that have become official now that the COLA announcement has been made.
Retirement and Disability benefit amounts will remain unchanged in 2016 compared to 2015 since there is no COLA for 2016
The maximum earnings subject to SS taxes will remain at $118,500
The earnings limit that is part of the “earnings test” will remain at $15,720 for the years prior to your full retirement age. This means you will not be subject to a reduction in SS retirement benefits due to remaining employed as long as you earn less than $15,720. If you earn more than that your benefits are reduced $1 for every $2 earned over that limit. Remember, that earnings limit goes away completely the month you reach your full retirement age.
People currently receiving benefits and having their Medicare Part B premiums withheld from those benefits will be protected from any Medicare premium increase in 2016. However, if you have not claimed Social Security benefits by October 2015 you will be exposed to the premium increases. This is the subject of the blog post I reference at the top of this article.
Most Social Security offices will have longer hours of operation in 2016 to handle all the folks needing assistance in claiming and figuring out this giant puzzle we call Social Security.
I guess the good news is that we now have clarity on our SS situation for next year. Once the Medicare premium shoe drops next month we will find out exactly how much the Medicare premium increase will be for those exposed to that increase. The increase for those people is expected to be so high that some Congress people are talking about trying to pass legislation to stop or reduce the increase, but we all have seen how quickly things move through Congress these days so I would not delay making any travel plans based on something positive coming from them.
As always, please let us know if we can answer any questions or assist you in your Social Security claiming decisions. We will be back next week with a more uplifting topic (hopefully) !!
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