People have been paying close attention to Social Security for a few years now, and a lot of work has gone into changing how it works to make sure it lasts and protects the people who use it.
In the same way, a new bill proposed by Democrat Ruben Gallego in Arizona wants to change how the annual cost-of-living adjustment (COLA) for Social Security benefits is worked out. The Boosting Benefits and COLAs Act is the name of the bill that wants to change Title II of the Social Security Act.
To make the change, the Commissioner of Social Security would have to make a change that has been suggested many times: the yearly COLA should be based on the Consumer Price Index for Elderly Consumers (CPI-E) instead of the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
In order to protect the interests of seniors, however, the CPI-W would still be used if it led to a bigger change than the CPI-E.
At the moment, the yearly COLA is found by looking at the percentage change in the CPI-W from the third quarter of the previous year to the third quarter of this year. If the CPI-W doesn’t go up during this time, which doesn’t happen very often but can happen, no COLA is applied.
The goal of this change is to make sure that Social Security payments keep up with the cost of living. According to one example, the COLA was set at 3.2% in 2024, which was a big drop from the 8.7% increase the previous year.
The impact of an unsuitable COLA on Social Security
Representative Gallego is worried that the current way of figuring out COLA doesn’t take into account the costs that seniors have, which are often different from those of the general American population.
One important example is how medical costs affect older people more than younger people. The CPI-E gives these costs more weight than the CPI-W, which is more focused on wage earners and office workers rather than pensioners.
“Rising costs mean that Arizona seniors who get Social Security will see the real value of their benefits go down,” Gallego said in a written statement after the bill was introduced.
People who get Social Security will have more money to pay their bills, get their medicine, and pay for rent thanks to my new bill. It is only fair that Arizona’s seniors get their Social Security payments.
Rome Ulman, President of AFSCME Arizona Retirees Chapter 97, agrees with what Representative Gallego said. Ulman said that the way the yearly COLA is calculated now is flawed because it doesn’t take into account the rise in health care costs for seniors.
He stressed how important it was to make sure that the COLA correctly reflects the rising costs that seniors face, especially in areas like healthcare, so that their Social Security benefits continue to cover their costs, which they don’t always do now.
Representative Gallego worked on this issue in the House of Representatives, and Senator Bob Casey of Pennsylvania, a Democrat, also filed a bill that goes along with it in the Senate.
This shows that both houses of Congress are working together to fix what they see as a problem with the way Social Security COLA is calculated now. These bills might be able to pass without many problems because the Republican party usually backs issues that affect seniors.
If the proposed law is passed, it would apply to cost-of-living calculations for quarters finishing on or after September 30, 2024.
This change is meant to make sure that changes to Social Security are more in line with what seniors actually need to live, especially when it comes to health care costs, which can have a big effect on their ability to pay their bills.
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