New legislation, the Boosting Benefits and COLAs for Seniors Act, calls on the Social Security Administration to adjust benefits based on either the Consumer Price Index for Urban Wage Earners, or CPI-W, or the Consumer Price Index for the Elderly, or CPI-E— whichever is greater.
The CPI-E for Americans aged 62 or older takes into account medical expenses. Current benefits are based off the CPI-W, which "under-measures health care costs," Nancy Altman, president of Social Security Works, told ThinkAdvisor Tuesday in an email. "Benefits are slowly eroding" because the COLA is based on the CPI-W, she said.
The 2026 Social Security COLA of 2.8%, announced Oct. 26, will amount to, on average, a $56 per month boost in retirement benefits starting in January.
The 2.8% increase is "a number that three out of four Americans aged 50 and older say is not enough to keep up with rising prices," Sen. Richard Blumenthal, D-Conn., said Monday in introducing the bill. Social Security benefits "have failed to accurately account for rising costs and inflation," he said.
Previous bills to adjust the COLA "simply switched to the CPI-E," according to the National Committee to Preserve Social Security and Medicare. "Most years the CPI-E would result in the higher COLA, but there have been a few years in the past when medical inflation was slower than general inflation — usually because general inflation was through the roof."
The National Committee to Preserve Social Security and Medicare has endorsed the bill. "We believe this bill would go a long way toward protecting those on fixed incomes from the ravages of inflation," said Max Richtman, the group's president and CEO.
Blumenthal introduced the bill along with Sens. Kirsten Gillibrand, D-N.Y.; Ruben Gallego, D-Ariz.; and Rep. Nikki Budzinski, D-Ill.
Health care costs are "currently skyrocketing, with Medicare Part B premiums projected to increase by twice as much as last year," Altman relayed. The bill "would correct this by incorporating a more accurate formula, the CPI-E."
Co-sponsors of the bill include Sens. John Fetterman, D-Pa; Bernie Sanders, I-Vt.; Peter Welch, D-Vt; Sheldon Whitehouse, D-R.I.; Jack Reed, D-R.I.; Elizabeth Warren, D-Mass.; and Angela Alsobrooks, D-Md.
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