Q: I’m a 79-year-old retiree who naturally reads articles concerning Social Security. I read your recent column about Social Security cost-of-living adjustments (COLAs), which stated “a year hasn’t gone by since Social Security was created in the 1930s without a COLA.” It’s my understanding that there was no COLA for Social Security until the 1970s. Can you clarify? — J.F., Mount Dora, Fla.

A: The column you’re referring to dealt with the formula that determines annual Social Security COLAs, and the prospect that beneficiaries probably won’t receive an adjustment in 2010 due to the low rate of inflation. However, it seems I over-reached a bit on the history of inflation adjustments. Going back to check my facts, I learned that there was no automatic COLA until 1975, when the current formula was put in place.

No COLA was passed along to beneficiaries at all from the time the first Social Security benefits were paid (1940) until 1950. From that point onward, adjustments were approved by Congress sporadically. In 1950, lawmakers made up for lost time–and buying power–by approving a whopping 77 percent increase, and they followed that up with smaller double-digit increases in 1952 and 1954. Adjustments were approved occasionally in the years leading up to the automatic COLA provision became effective. Some of the COLAs approved in the 1970s were very large, reflecting the galloping inflation rate of that time.

For more on the history of Social Security and inflation, visit this page on the Social Security Administration’s website.

Q: I read that there will be no increase in Social Security for 2010, but that Medicare Part B and Part D premiums will increase. Is that true? -- C.M., via the Internet

A: Most Social Security recipients choose to have their Medicare premiums deducted from their monthly checks. Part B covers physician and nursing services, tests and vaccinations; the COLA normally is more than enough to cover any annual increases. The Part B monthly premium has been rising sharply in recent years. It was set at $96.40 this year, and jumps to $104.20 in 2010 and $120.20 in 2011. However, about 75 percent of Medicare recipients are covered by a “hold harmless” provision of the law that protects them from a net decrease in Social Security benefits. That means these beneficiaries will be exempted from the Part B premium increases.

Several categories of Medicare recipients aren’t protected under the hold-harmless provision, including high-income people, new enrollees and low-income individuals eligible for Medicaid (in these situations, Medicaid pays the Part B premium).

Part D prescription drug plan participants aren’t protected under the “hold harmless” provision; that means they could see lower Social Security checks if their plans push through premium increases. The only exceptions are certain low-income individuals participating in special Part D subsidy programs.

Q: I’m 62 years old and my husband is 60. I thought I would delay receiving Social Security benefits until I was 65 in order to receive a higher amount for life, but an article I read recently suggested that I should collect on my benefits now, which would be $732–and then at age 66, switch to spousal benefits of $899, which is half of what my husband will get at full retirement ($1,798). It would take me until I was 65 to receive that amount through my Social Security and I would lose all the money I could collect now. Am I correct about this? – Marie, via the Internet

A: “In this example, the husband’s retirement benefit at full retirement age is $1,798, so 50 percent of that amount ($899) would be the maximum that spouse could receive from his record,” says a Social Security Administration spokesman. “From that amount, we subtract the amount of the wife’s retirement benefit at full retirement age. If she’s currently receiving a reduced retirement benefit of $732, that means that her monthly benefit at full retirement age (66) would have been $976. This amount is higher than 50 percent of her husband’s retirement benefit at full retirement age ($899), so there would be no spousal benefit due later at age 66.”

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1. Reader Q&A: Social Security spousal benefits
2. Reader mailbag: Working while receiving Social Security disability
3. Reader mailbag: Do IRA Withdrawals Affect Social Security Benefits?
4. Reader mailbag: Social Security, rollovers and encore careers
5. Reader mailbag: Allocations, Social Security taxes and Roths

Tags | Medicare, Q&A, Social Security