COLA flat but premiums to rise anyhow

Federal retirees and their survivors are an amazing bunch. Many held jobs — some they can’t talk about — that made us healthier, safer and more prosperous. During their careers, a lot of them literally risked life and limb on our behalf. We owe them a great deal, more than most of us will ever know or acknowledge.

Former feds can be a cranky and hard-headed lot. For example, retirees including military retirees and people who get Social Security, are supposed to get a catch-up with inflation increases each January. This year they got a 1.7 percent adjustment, which isn’t much, but better than a sharp stick in the eye. The year before they got 1.5 percent.

The problem this year is that the 2016 cost-of-living adjustment is looking more like zero. As in nothing, zip. And this is where the retirees can be so hardheaded. Medicare Part B premiums for some people, including retired federal and postal folks, and their survivors, are scheduled to go up 52 percent in the program. That’s a lot.

Later this month, the government will announce 2016 premiums for federal workers and retirees under the excellent (and it really is) Federal Employee Health Benefits Program. Congress set up the FEHBP with guarantees that no matter how much premiums go up —and they usually do — Uncle Sam will still pay most of them. In most cases, the government will pay 70 percent or more of the total premium. Postal workers, thanks to their union contract, get an even better deal.

But the increases are mandatory. If you don’t like what your health plan is going to cost next year, or think you can’t afford it, you can switch plans. But premiums are almost certainly to go up for many, if not most of the plans.

Yet with all these pending price increases retirees are told — and the government data backs it up —there hasn’t been enough inflation to trigger a 2016 COLA.

According to David Snell of the National Active and Retired Federal Employees, “With the second of three months of data now released, it looks unlikely that there will be any cost of living adjustment to civil service annuities, Social Security benefits or military retirement annuities.

The 2016 COLA for civil service annuities, as well as Social Security benefits and military retirement annuities, is determined by comparing the average of the July, August and September of 2015 index figures to the average of the same months (the third quarter) from 2014. The percentage increase, if any, determines the COLA.

In August, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased by 0.19 percent, to an index figure of 233.366. This is 0.37 percent lower than the average CPI-W for the third quarter of 2014, which was 234.242 (1982-84 = 100); and the July-August average is 0.28 percent lower.

With only one month left, the CPI-W would need to rise substantially to trigger any COLA. At this point, that seems very unlikely. Unfortunately, this would not only prevent an increase in annuities, but it may cause a large (up to 52 percent) and disproportionate increase in Medicare Part B premiums for many federal retirees.

So how come so many retirees still don’t get it? For the record, a lot of them would really like to know.

Nearly useless factoid

By Meredith Somers

Due to the slow rotation on its axis, a day on the planet Venus is a little longer than a year on Venus. It takes 243 Earth-days to complete one rotation (one “day” on Earth), but the orbit of the planet takes 225 Earth-days (one “year” on Earth).

Source: NASA

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