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Seniors Receive 3.5% COLA More than Last Year, But Still Not Enough to Keep up with Rising Costs Seniors will receive a 3.5% Cost-of-Living Adjustment (COLA) increase for 2001, the highest since December 1992. Although seniors depend upon COLAs to ensure their spending power is preserved, the increase is a far cry from keeping up with roaring health care costs. The 3.5% increase will raise the average benefit by about $29 per month-up to $845 next year. COLAs are not keeping up with senior costs, in part, because they're determined by an index that does not represent senior costs. COLAs are indexed to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) which surveys the increases in costs for younger working families. The Bureau of Labor Statistics, however, tracks an experimental price index for seniors 62 years of age or older, the Consumer Price Index for the Elderly (CPI-E). The CPI-E has been growing at a faster rate since the BLS has tracked the data, driven largely by the increases in medical costs. Seniors devote a substantially larger share of expenditures to health insurance and prescription drugs than younger working families for whom health insurance is likely to cost less and is often provided by employers. During the past session of Congress TSCL supported legislation that would create more fair senior COLAs by indexing them to the CPI-E. TSCL will continue to press forward on this issue with the start of the new 107th Congress. Source: Social Security Commissioner Kenneth S. Apfel Announces 3.5 Percent Social Security Increase, October 18, 2000. This article first appeared in Volume 6, Issue 2 of "The Social Security and Medicare Advisor" newsletter (December/January/2001). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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