Savvy Senior

2009 Social Security and Medicare Adjustments

Dear Savvy Senior,

Can you give me a full run-down on the Social Security and Medicare changes for 2009?

Planning Ahead

Dear Planning,

Uncle Sam has good news for seniors in 2009! Come January, you and more than 50 million other Americans receiving Social Security benefits will get a 5.8% raise, the largest since 1982.

Medicare also recently announced that your Part B monthly premium (which covers doctor and outpatient services) will not go up next year, the first time there’s been no increase in eight years.

Here’s a rundown on what else you can expect in 2009.

SSA Adjustments

Social Security has been giving automatic cost-of-living-adjustments (COLAs) to keep pace with inflation every years since 1975.

The 5.8% for 2009 is the largest in 25 years. The 2009 COLA is figured based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of 2007 through the third quarter of 2008.

Here’s a run-down of some other Social Security COLA numbers that may interest you:

• The 5.8% increase will mean that the “average” monthly Social Security check for an individual will go from $1,090 in 2008 to $1,153 in 2009—an increase of about $63.

• The average retired couple who both receive benefits will see their monthly check go from $1,773 to $1,876.

• The maximum Social Security benefit any worker can get at full retirement age in 2009 will be $2,323 per month.

• The maximum amount of earnings that are subject to the Social Security tax will increase from $102,000 to $106,800.

• Retirees who work and receive benefits but are under full retirement age will see their 2009 earnings limit increased to $14,160 (it was $13,560 in 2008). That limit jumps to $37,680 (up from $36,120 in 2008) the year a worker reaches full retirement age.

2009 Medicare

Most Part B premiums will not be increased from the previous year. Your 2009 Part B premium will be $96.40 per month–the same as in 2008.

The news for wealthier seniors–who make up about 5% of Medicare enrollees–isn’t as good.

Their premiums will be increased based on their income level, with increases for any individuals with income of more than $85,000 a year, or married couples filing joint tax returns with incomes of more than $170,000.

Other notable Medicare announcements you should know include your Part B deductible, which will not change in 2009. It will remain $135, which is what it has been throughout 2008.

But your Part A (hospital insurance) annual deductible will go up $44 in 2009 to $1,068 for hospital stays up to 60 days. That increases to $267 per day for days 61-90, and to $534 a day for days 91-150.

Savvy Tips

Visit www.socialsecurity.gov on the Internet or call (800) 772-1213 for more information on the 2009 Social Security cost-of-living adjustments.