Social security retirement benefits are set to receive a 3.6 percent cost-of-living adjustment in 2012, the first such increase since 2009 and now for many social security recipients that increase could be off-set by increases to medicare premiums and other expenses.
Under the new increase a senior with a payment of $1,186 per month will receive $43 more or approximately $516 per year.
While it’s good news for social security recipients taxpayers could be forced to shell out a bunch more money to support the program.
According to SFGate:
For people still working, the maximum annual earnings subject to Social Security tax – called the wage base – will also increase next year, to $110,100 from $106,800. There was no increase in the wage base or benefits in 2010 and 2011 because the inflation factor used to determine the COLA did not rise enough to activate one.
The increase in the wage base, by itself, could cost highly paid employees up to $204 in additional Social Security tax, but the actual amount they pay will depend on where the tax rate ends up next year.
Under 2011 rules Congress lowered the 6.2 percent social security tax to just 4.2 percent, while employers continued to pay 6.2 percent. If that rule expires someone making $110,100 will pay $6,826 in Social Security tax,that’s $2,340 more than they will have paid in 2011.
In the meantime President Obama wants the tax cut in half to 3.1 percent for both employers and employees in 2012 with a maximum tax rate for employees set at $3,413.
At this time which Medicare law will be enacted is still unknown, for example under one law Medicare recipients as a group must pay 25 percent of the program’s costs which could wipe out social security increases for many recipients, while another provision will protect a social security recipients additional payment floor. The second provision known as the hold-harmless provision specifically states that if the Medicare premium increase is larger than the dollar increase for a persons social security check they don’t have to pay the excess which offsets a loss over their previous years payments.
The increase in a persons Medicare Part B in 2012 is dependent on what they were paying in 2011 and whether the basic premium goes up or down.
Whether a person pays more or less for Medicare Part B in 2012 depends on what they were paying this year and whether the basic premium goes up or down.
At this time the social security, medicare, taxpayer increases are still shrouded in a confusing mess of laws, possible laws and failed attempts to straighten out the entire system. How do you think the federal government should handle social security and medicare?