Social Security’s COLA could be just 3% in 2024 — after an 8.7% increase in 2023

Read: The Social Security COLA for 2024 could be 2.7%, down from 8.7%

The consumer price index for urban wage Earners and clerical workers, known as CPI-W, is the index that’s used to determine the annual COLA; it up only 2.3% on a year-over-year basis. However, the average inflation rate over the past 12 months rose slightly and bumped the COLA forecast to a 3% hike based on the June data, said the Senior Citizens League’s Social Security and Medicare policy analyst Mary Johnson.

A COLA of 3% would raise an average monthly Social Security benefit — which currently stands at $1,787 — by a little more than $53.

Social Security recipients won’t be certain of the magnitude of the payment increase until the Medicare Part B premiums are announced. Part B premiums are automatically deducted from most beneficiaries’ Social Security benefits. In many years, the Part B premium increase can claim most, or even all, of the COLA, leaving little to cover other rising prices, Johnson said.

In its annual report released in March of this year, the Medicare Trustees forecast monthly Part B premiums would increase to $174.80 in 2024, up from $164.90 in 2023.

One of the most significant new costs could be Medicare’s coverage for another new Alzheimer’s drug, lecanemab, known by the brand name Leqembi, which is expected to cost about $26,000 per year without insurance.

“Based on spending estimates, we forecast that the drug and related Part B services required to administer and monitor the patient for dangerous side effects would add about $5 per month to the Part B premium for everyone, potentially raising the 2024 premium to about $179.80 per month,” Johnson said in a statement. “Altogether most beneficiaries may see their Part B premium rise by almost $15 per month from 2023. Other costs could drive Part B premiums even higher.

“As of today’s COLA forecast, the affordability outlook for a $15 per month Part B increase looks challenging for some but doable for most Medicare beneficiaries,” she added.

If inflation continues to slow and the COLA for 2024 is lower, the risk that the Part B premium increase may exceed the percentage rise of the COLA, especially for those with the lowest Social Security benefits, she said.

Meanwhile, the Committee for a Responsible Federal Budget said they expect the COLA increase in 2024 to be in the range of 2.6% to 3.3%.

The 3.3% estimate assumes inflation continues at its recent trend, while the 2.6% forecast assumes no net inflation for the remainder of the year, CRFB said.