No Social Security Cost-of-Living Adjustment for 2011

Last Updated: 11/2/2010

The Social Security Administration recently announced that Social Security, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits will not automatically increase in 2011. Other key federal benefit thresholds will also remain the same, with the exception of Medicare premiums for certain beneficiaries.

Federal law contains a complicated formula for determining when automatic increases in Social Security and SSI benefits may occur. In essence, the Social Security Administration looks at the Consumer Price Index from the third quarter of the last year that the government made a cost-of-living adjustment (in this case, 2008), and then the agency compares that number to the Consumer Price Index from the third quarter of the current year. If the current year's figure is higher than the older number, the Social Security Administration is required to raise monthly Social Security and SSI benefits. Unfortunately, the 2010 numbers fell below the 2008 numbers, so there will be no automatic cost-of-living increase in 2011.

Because there is no cost-of-living adjustment for 2011, the federal SSI payment standard will remain at $674 a month for an individual and $1,011 a month for a couple. The SSI student exclusion limit (the amount of earned income that an SSI beneficiary who regularly attends school may exclude from her SSI benefit calculation) will also remain the same at $1,640 a month, with a yearly cap of $6,600.

The amount of money that a person can earn without engaging in Substantial Gainful Activity (which triggers a process that can result in the loss of SSDI or SSI benefits) is going to hold steady at $1,000 a month for a person who is not blind and $1,640 for a person who is blind. Likewise, the Trial Work Period limit of $720 a month stays the same.

Medicare is the one uncertainty in 2011. Under current law, Medicare premiums are not tied into the same cost-of-living system, which means that Medicare Parts B, C and D premiums could increase next year. If this happens, 70 percent of Medicare beneficiaries, including most low-income beneficiaries, will probably not have to pay higher premiums due to a so-called "hold harmless" provision in federal law. Medicaid beneficiaries who have their Medicare premiums paid by their state Medicaid agency will also avoid having to pay increased premiums. However, some new beneficiaries and beneficiaries with higher incomes could see increased Medicare premiums in 2011.

To read the Social Security Administration's press release detailing the lack of a cost-of-living adjustment in 2011, click here.

To read a fact sheet with all of the relevant 2011 benefit amounts and threshold figures, click here.

You can read an FAQ about the cost-of-living adjustment here.