For the 2nd year in a row people who rely on Social Security wont be receiving a cost of living increase. This is only the 2nd time since the cost of living adjustment (COLA) was adopted that receivers have not received an increase.
The reason Social Security benefits wont be revised in 2011 is that inflation has been very low. The whole premise behind the COLA is that benefits are adjusted for inflation so receivers can sustain increasing prices. If there's no inflation, there is no need for cost of living increase. The most recent inflation numbers published by the Labor Department shows that prices are lesser than they were in 2009, the last time Social Security benefits were increased.
The cost of living adjustment in 2009 was the largest seen in 27 years at 5.8%. The raise in 2009 was so large due to gas prices that sky-rocketed in the summer of 2008. When gas prices fell, so did the in general inflation rate. While the government can't reduce Social Security benefits if there is deflation (when prices are decreasing), they can decide to not give a COLA raise, which was the case for 2010 and looks to be for 2011.
Possible Incentive Payment to Help Seniors Who Depend on Social Security Benefits
To help Seniors who rely on their Social Security benefits to help with living costs, Congress will be voting on a $250 extra payment for Social Security receivers to help make up for the fact that Social Security benefits will remain the same for second year in a row. An update will be provided when the bill has been voted on.
No Social Security COLA Means No Increase in Medicare B Premiums
One silver lining to no cost of living increase is that Medicare Part B premiums wont go up for present enrollees. A small percent of Medicare Part B participants will pay increased premiums, including people who've Medicare Part B but who are not yet collecting Social Security benefits, people who are considered "high income" and people who're just now enrolling in Part B. However, a "hold-harmless" facility protects current participants from rate increases if their Social Security benefits do not raise, therefore no cost of living raise for Social Security recipients also means no Medicare Part B premium increase either.
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