Social Security checks to rise 2.7%

WASHINGTON — Social Security benefits for more than 47 million Americans will increase 2.7 percent next year, the government announced Tuesday. But higher Medicare premiums will take nearly half of the increase for a typical beneficiary.

The squeeze on Social Security payments reflects the fact that health costs are rising much faster than consumer prices in general.

The annual cost-of-living adjustment for Social Security is based on the rise in the Consumer Price Index. Medicare premiums, by contrast, are set at the level needed to finance about one-fourth of the cost of Part B of Medicare, which pays for doctors' service and other outpatient care.

Social Security officials said the average monthly cash benefit for retired workers would rise to $955 in January, from $930 this year, an increase of $25 a month.

But the Bush administration announced in September that the monthly Medicare premium would rise $11.60, or 17.4 percent, to $78.20, from the current $66.60. The increase in Medicare premiums will thus take 46 percent of the increase in the average Social Security benefit for retired workers.

Most elderly and disabled people have their Medicare premiums deducted from their monthly Social Security checks.

William D. Novelli, chief executive of AARP, the lobby for older Americans, said, "Far too many Social Security beneficiaries will see the Social Security cost-of-living adjustment partially or completely eroded by the Medicare premium increase." For 8 out of 10 retirees, Novelli noted, Social Security is the primary source of income.

Retirees, like other consumers, also face the prospect of higher heating bills this winter. Those costs, like medical costs, are increasing faster than Social Security benefits.

Rep. Pete Stark of California, senior Democrat on the Joint Economic Committee of Congress, said, "Nearly 13 million beneficiaries will have half or more of their cost-of-living adjustments taken away by the increase in Medicare premiums next year."

In the presidential campaign, Sen. John Kerry has repeatedly accused President Bush of mismanaging Medicare.