Federal employee unions and associations have been ringing alarms bells for months that a small cost-of-living-increase would be more harmful than none at all in 2017.
Barring congressional action, they may be right.
The September Consumer Price Index for Urban Wage Earners and Clerical Workers—which measures the prices certain service and clerical worker groups face in the market—rose only 0.3 percent for the month, triggering higher Medicare Part B premiums for federal retirees.
The premiums will rise for an estimated 16 million retirees because of a rule called the hold harmless provision, which allows 70 percent of Medicare beneficiaries, those that receive Social Security benefits, to cap their premium increase.
Those without Social Security benefits, however, have to pick up the rest of the premium costs, which are projected to be $149 a month in 2017.
Federal retirees were spared a 52-percent rate spike from hold harmless last year when Congress kept the premiums at $121 a month as part of the Bipartisan Budget Agreement. The bill also extended those protections if there was no COLA in 2017.
But the bill didn’t account for a small COLA, meaning many federal retirees will face a 23 percent rate hike.
“It is grossly unfair that those who pay their premiums from something other than Social Security must pay more in premiums,” said National Active and Retired Federal Employees Association President Richard Thissen in a statement.
“There is no reason why two people with the same income should pay different Medicare premiums based on whether the money is coming from a Social Security check or a federal annuity.”
NARFE and other federal employee groups like the National Treasury Employees Union, Senior Executives Association and the American Federation of Government Employees are asking for congressional intervention, but with a narrow legislative calendar and the distraction of election season, time for a fix maybe limited.
“Prices for many items that seniors must purchase are rising faster than the overall inflation rate,” said AFGE national President J. David Cox in a statement. “Forcing this group of retirees to shoulder such a huge cost burden will have a devastating impact on their already modest living standards.”
The COLA news hits federal retirees at a time where multiple insurance policies have seen increases.
“In addition to a large increase in Medicare premiums, federal retirees face an average increase of more than 6 percent in their Federal Employees Health Benefits Program premiums in 2017,” Thissen said.
“And both of these increases come on top of an average increase of 83 percent in the Federal Long Term Care Insurance Program premiums, which will take effect in November. Given the large increase in health care and insurance costs, it is crystal clear that the current formula does not accurately reflect how seniors spend their limited annuities.”
Congress returns on Nov. 14 and must reach a budget agreement by Dec. 9.