Social Security and Medicare Changes Under New COLA

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By on October 30, 2013 in Current Events, Retirement with 34 Comments

The cost-of-living adjustment for Social Security recipients, CSRS retirees and FERS retirees (other than special category employees) age 62 or older will be 1.5%.  Social Security changes for 2014 follow:

2013 2014
Amount of income out of which SS payroll taxes are taken $113,700 $117,000
Amount needed to earn a quarter of coverage (credit) $1,160 $1,200
Earnings test from age 62 until the year full retirement age is reached $15,120 $15,480
Earnings test in year full retirement age is reached $40,080 $41,400
Substantial gainful activity for disability recipient $1,040 $1,070

Medicare changes:

Part A deductible – $1,216 per benefit period

Part A co-pays:

Days 61 – 90 – $304 per day

60 lifetime reserve days – $608 per day

Part B deductible – $ 147 per year

Part B premium – $104.90 per month (may be higher for high income individuals)

Skilled nursing co-pay for over 20 days – $152 per day.

IRS has not yet announced whether or not there will be any changes in the elective deferral limit for the TSP or the contribution limits for IRAs.  Neither have they updated income restrictions on deducting one’s contributions to a traditional IRA, or in being able to contribute to a Roth IRA.  It is expected that they will announce any changes soon.

OPM has not yet announced the changes in inflation indexed benefits that will result from the COLA.  It is not expected that they will announce changes anytime soon.  In fact, they usually delay several months before they announce those changes.  I think that we can be safe if we multiply last year’s numbers by 1.015.  Knowing that I may be off by a dollar or so, I predict that the OPM changes will be:

  • Children’s Survivor Benefits
    • With one living parent, the lesser of:
      • $501 per month per child; or
      • $1506 per month divided by the number of eligible children.
    • With no living parent, the lesser of:
      • $602 per month per child; of
      • $1808 per month divided by the number of eligible children.
  • FERS lump-sum death benefit (fixed amount):
    • $31, 786.21

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.