Proposed by Arizona Representative Ruben Gallego, a Democrat, a newly introduced bill aims to reform the calculation method for the yearly cost-of-living adjustment (COLA) to Social Security benefits. Named the Boosting Benefits and COLAs Act, the legislation seeks to amend Title II of the Social Security Act. It mandates the Commissioner of Social Security to utilize the Consumer Price Index for Elderly Consumers (CPI-E) for calculating the COLA, instead of the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In cases where the CPI-W exceeds the CPI-E, the former would still be employed.
Currently, the annual COLA is determined by the percentage increase in the CPI-W between the third quarter of the previous year and the third quarter of the current year. If there’s no increase, no COLA adjustment is made. The purpose is to align Social Security benefits with inflation. In 2024, the COLA stood at 3.2 percent, significantly lower than the previous year’s 8.7 percent increase.
Gallego asserts that the existing formula overlooks the unique expenses faced by retirees, which differ from the general population. Notably, medical costs disproportionately affect seniors, a factor reflected in the CPI-E but not adequately captured by the CPI-W.
In a recent written statement following the bill’s introduction, Gallego emphasized the diminishing purchasing power of Arizona seniors reliant on Social Security benefits. He contends that his proposed legislation aims to alleviate this strain by providing recipients with additional funds for essential expenses like housing and healthcare.
Roman Ulman, President of AFSCME Arizona Retirees Chapter 97, echoes Gallego’s concerns. Ulman highlights that the current COLA calculation method fails to account for the inflation seniors experience in healthcare costs. He emphasizes the importance of ensuring that the COLA accurately reflects the inflationary pressures faced by seniors to maintain their financial stability.
Senator Bob Casey of Pennsylvania, also a Democrat, introduced a companion bill to Gallego’s Boosting Benefits and COLAs Act in the Senate in March. This bipartisan effort underscores the significance of reforming the COLA calculation method to better serve retirees and Social Security recipients.
Should the proposed legislation pass, it would affect determinations made concerning cost-of-living computation quarters ending on or after September 30, 2024.
