Social Security Disability Recipients to See Small Cost of Living
Adjustment (COLA) Increase in 2013
Rising Medicare costs could offset additional income from COLA, reports Allsup
Belleville, Ill.-Oct. 16, 2012-Social Security recipients will see a slight increase in their monthly benefits in 2013-a 1.7 percent annual cost-of-living adjustment (COLA) will begin January 2013, according to Allsup, a nationwide provider of Social Security disability representation and Medicare plan selection services.
"The Social Security COLA is determined in part by the annual increase in the Consumer Price Index, which factors in the rate of inflation for the goods and services people buy," said Tricia Blazier, personal financial planning manager at Allsup. "This modest increase is attributed to the low rates of general inflation for the cost of these items in the past year."
Third quarter findings in the U.S. Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) are used by the Social Security Administration to set the following year's COLA, Blazier added.
Automatic benefit increases, or COLAs, have been applied to Social Security benefits every year since 1975 except for 2010 and 2011, when consumer prices did not experience typical increases, and 1983, due to an administrative change. COLA increases are applied to Social Security Disability Insurance (SSDI), Social Security retirement and Supplemental Security Income (SSI) benefits.
SSDI is a federally mandated disability insurance program overseen by the Social Security Administration (SSA) that operates separately from the retirement and Supplemental Security Income (SSI) programs. SSDI provides monthly benefits to individuals who are under full retirement age (age 65 or older) and who can no longer work because of a severe disability that is expected to last for more than 12 months or is terminal. Individuals must have paid FICA taxes to be eligible.
COLA by the Numbers
The COLA increase will provide a measure of relief to people with disabilities who rely on Social Security disability benefits. Based on the average SSDI benefit of $1,111.35 in August 2012, the increase will amount to about $18.89 per month, or approximately $227 for the year.
However, those already receiving Medicare benefits may see the increase offset by higher Medicare costs in 2013. SSDI beneficiaries begin receiving Medicare 24 months after entitlement to cash SSDI benefits.
"The COLA is one of the variables affecting Medicare premiums for the coming year," Blazier said. "The Allsup Medicare Advisor plan selection specialists are continuously analyzing Medicare plan changes, and early reports suggest higher co-pays and more restrictions could be among the changes for 2013."
The Centers for Medicare & Medicaid Services (CMS) is expected to report changes to 2013 Medicare premiums in the coming days.
How to Enhance Social Security COLA
Thoroughly assessing an individual's financial situation is the first step in helping to make sure a small COLA increase can go further, Blazier advised. Priorities for consideration include:
- Reviewing healthcare requirements and coverage.
- For those already receiving Medicare benefits, annual enrollment season (Oct. 15 - Dec. 7) provides the opportunity to make healthcare coverage changes. "If your circumstances have changed, or costs seem too high, this is the time to make those adjustments," Blazier said.
- For those awaiting Medicare eligibility, be sure to investigate extending existing healthcare by evaluating COBRA options. Check out healthcare resources that can help lower costs, such as prescription drug subsidy programs. Click here for a list.
- Reducing credit card debt. According to TransUnion, the average credit card debt per borrower is about $4,971, with total card originations in the second quarter of 2012 up by approximately 4 percent over the same period last year. "Applying even this modest extra income to credit card debt can help you pay it down and strengthen your overall financial position," Blazier said.
- Finding mortgage assistance. It might be time to get help with your mortgage. The U.S. Department of Housing and Urban Development (HUD) provides many resources to help homeowners avoid foreclosure, as well as provides a list of HUD-Approved Housing Counseling Agencies. Allsup offers an online guide to Mortgages and Foreclosures covering topics such as working with your lender, forbearance, refinancing and forced home sales.
- Pursuing additional resources. There are many government-sponsored programs available to low-income individuals, including assistance with heat, electricity and telephone bills; reduced public transportation fares; property tax credits; and food stamps, food pantries and free meals for children attending school.
How to Access Social Security Disability & Medicare Help
Individuals should consider applying for Social Security disability benefits if they have a severe or permanent disability and are no longer able to work. Financial benefits of applying for SSDI include increased monthly income, the potential to extend COBRA healthcare coverage, medical benefits through Medicare plans, protected retirement benefits, dependent benefits and return-to-work incentives.
For more information about eligibility for Social Security disability benefits, contact Allsup's Disability Evaluation Center at (800) 678-3276.
For answers to Medicare questions, contact the Allsup Medicare Advisor®, which works individually with consumers to help them choose the Medicare plan that best meets their needs. Visit http://Medicare.allsup.com or call (866) 521-7655.
Allsup is a nationwide provider of Social Security disability, Medicare and Medicare Secondary Payer compliance services for individuals, employers and insurance carriers. Founded in 1984, Allsup employs more than 800 professionals who deliver specialized services supporting people with disabilities and seniors so they may lead lives that are as financially secure and as healthy as possible. The company is based in Belleville, Ill., near St. Louis. For more information, go to http://www.Allsup.com or visit Allsup on Facebook at http://www.facebook.com/Allsupinc.