2022 Social Security ‘Cost Of Living’ (COLA) Predictions

August 17, 2021

2022 COLA Predictions

Every year, Social Security beneficiaries receive a cost-of-living adjustment, or COLA, which typically increases their monthly payments by a small percentage. For 2022, beneficiaries could be in for a substantially larger than normal COLA. In 2021, the COLA was 1.3% - in 2022, expectations are predicting 5.3% - this would be the largest increase since 2009 - 5.8%. The COLA historically drives up the cost of the Medicare Part B premium, in turn, more beneficiaries may be looking to purchase a Medicare Supplement to help keep medical costs predictable.

Why Such A Large Increase?

The COLA is expected to have a larger increase because of the Covid-19 pandemic. Prices have consistently increased for everyday items such as gas and groceries. In turn, the cost of living is on the rise.

Medicare Part B Premiums

Historically, whenever there is an increased COLA, there is an increase in Medicare Part B Premiums. Part B Premiums could significantly rise and potentially cancel out any raise beneficiaries would see in their monthly Social Security checks.

The good news - roughly 70% of Medicare beneficiaries have a “hold harmless” clause in Medicare, which states no increase in Part B Premiums can reduce a Social Security recipient’s monthly check below what it was in the previous year. Because 2022 COLA is anticipated to be so large, and inflation is projected to go down, seniors with the “hold harmless” clause will actually have more money in their pocket, giving them more purchasing power when it comes to purchase a Medicare Supplement.

The final COLA number will be announced in October.

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