No 2011 Federal Retiree COLA:
CSRS and FERS

UPDATE: October 15, 2010
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Under current law, there will be no 2011 cost-of-living adjustment (COLA) for Social Security recipients and annuitants in the Civil Service Retirement System (CSRS), and annuitants in the Federal Employees Retirement System (FERS). This is the second year in a row that retirees have seen no COLA increase.

The Social Security Act provides for an automatic COLA increase if there is an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a cost-of-living adjustment (COLA) was determined to the third quarter of the current year.  As determined by the Bureau of Labor Statistics, there is no increase in the CPI-W from the third quarter of 2008, the last year a COLA was determined, to the third quarter of 2010, therefore, under existing law, there can be no COLA in 2011.
 
According the Social Security Administration, other changes that would normally take effect based on changes in the national average wage index also will not take effect in January 2011.  Since there is no COLA, the statute also prohibits a change in the maximum amount of earnings subject to the Social Security tax as well as the retirement earnings test exempt amounts.  These amounts will remain unchanged in 2011. 

2011 Medicare Changes

Information about Medicare changes for 2011, when available, will be found at http://www.Medicare.gov.  The Department of Health and Human Services has not yet announced if there will be any Medicare premium changes for 2011.  Should there be an increase in the Medicare Part B premium, the law contains a "hold harmless" provision that protects more than 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit.  Those not protected include higher income beneficiaries subject to an income-adjusted Part B premium and beneficiaries newly entitled to Part B in 2011.  In addition, almost 20 percent of beneficiaries have their Medicare Part B premiums paid by state medical assistance programs and thus will see no change in their Social Security benefit.  The state will be required to pay any Medicare Part B premium increase.

The Outlook for the 2012 COLA

According to the National Association of Active and Retired Federal Employees (NARFE), "whether there is an automatic COLA for 2012 will depend on whether the CPI-W for July, August, and September of 2011 is higher than the 2008 third quarter average.  The September CPI-W figure (214.306) is still 0.55% below that figure (215.495)."

For more information, visit:

NARFE:
http://www.narfe.org/departments/home/articles.cfm?ID=942

Social Security Administration:
http://www.socialsecurity.gov/cola/