For the first time since 2009, social security recipients will get a 3.6% cost-of-living adjustment (COLA). The COLA adjustment will also affect other areas:
- The maximum amount of earnings subject to the social security tax will increase from $106,800 to $110,100.
- The minimum amount a worker must earn to qualify for a quarter of coverage under social security is $1,130.
- The amount a social security recipient can earn before having to forfeit social security benefits is increased to $14,640. This only applies to people that are receiving benefits before their “Full Retirement Age” (FRA) and are also receiving wages. For example, if you started to receive benefits at age 62 and your FRA is 66, you cannot earn more than $14,640 in wages without being penalized. The income limit does not apply to investment or pension earnings.
Medicare also just announced their premium adjustments for 2012. The new premium for part B will be $99.90/month.
- If you were on Medicare in 2008, your premium was frozen at $96.40, due to a law that freezes part B premiums in years that there are no COLA increases if you also receive social security.
- If you started Medicare in 2009 – 2011, the premium was $115.40, so the premium will be reduced to $99.90 for those recipients.
- Medicare premiums are higher for recipients that have Adjusted Gross Incomes of more than $85,000 for single and $170,000 for married taxpayers. Those premium adjustments have not been announced yet.
Medicare Part D prescription drug coverage and Medicare Advantage enrollment runs until December 7th this year, which is earlier than in previous years when enrollment ran until the end of the year. A great resource to help you decide is on the medicare website:
You just need to provide information about your prescription drugs and you will see what each plan in your area will cost in premiums and out-of-pocket expenses.