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Medicare costs to reduce Social Security increase

October 20, 2011 12:00:00 AM PDT
Social Security is seeing its first boost since 2009, but Medicare premiums could erase a part of that increase.

Medicare is expected to announce the 2012 Part B Premium increase as early as next week. It could wipe out as much as a fourth of the 3.6 percent raise from Social Security.

Those premiums, which cover doctors visits, are deducted automatically from monthly Social Security payments.

The Social Security Administration announced the pay increase Wednesday. The boost offered some comfort to millions of retirees and disabled people, many who have seen their retirement accounts dwindle, home values drop and out-of-pocket medical costs rise in the years since their last raise.

Starting in January, 55 million Social Security recipients will get increases averaging $39 a month. That amounts to just over $467 for the year. In December, more than 8 million people who receive Supplemental Security Income, the disability program for the poor, will get increases averaging $18 a month, or about $216 for the year.

Overall, 1 in 5 U.S. residents stand to get a raise from the cost-of-living adjustment, or COLA.

The annual cost-of-living adjustment is tied to an inflation measure released Wednesday. The measure, which was adopted in the 1970s, produced no COLA in 2010 or 2011 because inflation was too low. Those were the first two years without a COLA since automatic increases were enacted in 1975.

The Associated Press contributed to this report.

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