For several years, the Social Security program has been under review, leading to significant reform initiatives aimed at ensuring its sustainability and protecting its beneficiaries. In this context, a new bill introduced by Arizona Democratic Representative Ruben Gallego seeks to change how the annual cost-of-living adjustment (COLA) for Social Security benefits is calculated.
What Does the New Law Propose?
The bill, known as the Boosting Benefits and COLAs Act, aims to amend Title II of the Social Security Act. The primary change would require the Commissioner of Social Security to use 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) to calculate the annual COLA. However, to ensure seniors get the highest possible adjustment, the CPI-W would still be used if it results in a larger increase than the CPI-E.
Why is a COLA Change Necessary?
Representative Gallego has voiced concerns about the current COLA calculation, stating it doesn’t accurately reflect the real costs faced by retirees, particularly in areas like medical expenses, which weigh more heavily in the CPI-E.
Key benefits of the proposed law:
- COLA adjustments based on actual senior living expenses.
- Protection against rising medical costs.
- Ensures benefits keep up with inflation.
When Would the New Law Take Effect?
If passed, the law would take effect for cost-of-living adjustments calculated on or after September 30, 2024, better aligning Social Security benefits with retirees’ actual expenses, especially in healthcare, to improve their financial security.
This bill, along with a companion piece introduced by Senator Bob Casey in the Senate, represents a joint effort to enhance financial support for retirees across the country.
