What You Can Do About the 2013 COLA Increase

                                                        

In September 2012, the media first began announcing that COLA adjustment that would go into effect in January 2013.  This gave everyone who would be affected at least 3 months to make necessary adjustments to their budget and spending habits to ease the burden of the reduced COLA increase.  However, many recipients forgot about it and didn’t start complaining until they received their first benefit check in January 2013.   

Social Security and disability benefit recipients and those who receive a federal or military pension are affected by the COLA adjustment. Fifty-six million receive social security benefits.  The COLA adjustment was effective December 1, 2012 and increased by 1.7% in January 2013. The 2012 COLA increase was 3.6%.  The COLA adjustment increased the average monthly benefit payment by $21, from $1,240 to $1,261.

For people still working, the COLA increase resulted in a higher earnings ceiling for Social Security payroll taxes. The ceiling was raised to $113,700 in 2013.  The COLA adjustment also affects how much money employees need to earn each quarter to qualify to earn credits for Social Security payments when they retire.
Unfortunately, the COLA adjustment seemed as though it did not help benefit recipients due to the increase in food prices, housing costs and prescription drug costs.   

Seven of the top 10 prescription drug plans increased costs by 11% or more in 2013.  Some of the drug plans affected include Humana Wal-Mart Preferred RX Plan which increased 23%, First Health Part D Premier, First Health Part D Value Plus, Cigna Medicare Rx Plan One which increased 15% and Part D premiums. One of the cheapest drug plans available is United Health's Medicare Rx Saver Plus PDP which costs $15 a month. However, Part D premium increased out-of-pocket expenses more than the 1.7% COLA adjustment. Part B premiums are $99.90 a month for those who make up to $85,000 a year as single or up to $170,000 for married couples. 

Create a life where you are minimally impacted by the effects of the economy.  Ensure you are at least able to meet all of your basic needs. Here are 17 ways to minimize the effect of changes to your benefits.

1.  Exercise.  Exercise every day to improve your health and reduce stress.  This will result in less medical costs.

2.  Ask for help. Ask your church, family or friends for help. Find out about other social services such as Catholic Charities for America or the Salvation Army.

3.  Save Money. Create an emergency fund with enough money to cover at least 9-12 months’ worth of monthly bills.

4.  Barter. Barter for services or use sites such as www.barternews.com/mappage/default.htm.

5.  Eat like people did in the depression. Eat peanut butter and jelly, mustard, mayo or egg sandwiches. Make inexpensive dishes like casseroles, soups or stews.

6.  Online banking. Pay bills online to save money on postage and writing checks.

7.  Prices. Ask about discounts and specials to find a cheaper price or negotiate to get a lower price.

8.  Comparison Shop. Get at least 3 price quotes for every item you need to purchase.

9.  Buy generic. Guy generic brand prescriptions and food. Shop at thrift stores and discount stores.

10. Cancel phone service. Cancel your landline service and use your cell phone for all calls. Get the cheapest plan possible.

11. Share space. Don’t be afraid to share living space with others to save money. Consider co-sharing or elderly housing.

12. Cancel subscriptions. Cancel newspaper and magazine subscriptions.

13. Clothes. Buy wash and wear clothes or wear hand me downs.  Buy clothes in off-season, winter clothes during summer and summer clothes during winter.

14. Grow your own food. Grow your own fruits and vegetables and spices.

15. Cable. Get basic cable, rent movies from the library or cancel cable completely.

16. Make your own food. Make you own bread, pasta, ice cream, soda, juice, and deserts.

17. Complain to your congressman about the high costs of prescription drug plans.