Social Security to increase in 2005 |

Social Security to increase in 2005

Dear Savvy Senior:

Can you tell me about the upcoming changes the government has in store for us seniors in 2005? I hear that the Medicare increase is significantly higher than the Social Security increase. Does this mean that our Social Security checks will be less next year than they are now because more will be going to pay for Medicare? What’s the story?

– Looking for a Raise

Dear Looking:

This is a good news and bad news story. The good news is that more than 52 million Americans will get an increase in their Social Security in 2005. But the bad news is, when you factor in the Medicare increases, it won’t go very far.

The Social Security Administration and Medicare have both announced their increases for 2005. For Social Security, the increase will be a 2.7 percent cost-of-living adjustment (COLA). But for Medicare, the increase is 17.4 percent for the Part B premium, which will cost you an extra $11.60 a month. Here’s the break down.

Social Security

Federal law requires that the Medicare Part B premium increase cannot be larger than the Social Security cost-of-living adjustment. In other words, no one should ever get a smaller Social Security check than they got last year. Here are some figures from the 2005 COLA, and how they may affect you:

The average monthly Social Security check for an individual (currently $930) will increase $25 in 2005. But, when you factor in the Medicare premium increase of $11.60 per month, which is automatically taken out of your Social Security check, the average monthly check will increase only $13.40 per month.

The maximum Social Security benefit any worker can get at full retirement age, which in 2005 is 65 and 6 months, is $1,939 per month. That’s an increase of $114 per month from 2004. The maximum amount of earnings subject to the Social Security tax will increase from $87,900 in 2004 to $90,000 in 2005.


The 17.4 percent increase for Medicare’s Part B premium, which covers doctors’ and outpatient services, is the largest premium increase in the program’s 40-year history. Here are some of the Medicare increases you will see in 2005:

Part B monthly premium will go from $66.60 to $78.20 a month. That’s an increase of $11.60 a month or $139.30 a year. Part B deductible will increase from $100 to $110 in 2005.

Part A (hospital insurance) annual deductible will increase from $876 to $912. Hospital charges go up from $219 to $228 a day after a 60-day stay in the hospital and $438 to $456 a day after a 90-day stay.

Savvy Fact: In 1967, the Medicare Part B premium was $3 per month.


Social Security has been giving automatic benefit increases since 1975. The COLA, which is supposed to keep up with inflation, is figured each year, based on the increase in the Bureau of Labor Statistics’ Consumer Price Index from the third quarter of 2003 through the third quarter of 2004. The largest COLA on record was back in 1980 when they gave a whopping 14.3 percent increase. However, over the past 10 years, the COLA increases have averaged less than 2.4 percent.

Savvy Resources

Social Security Administration: For more information on all the 2005 cost-of-living adjustments visit or call (800) 772-1213. Medicare: For complete details on the 2005 Medicare changes visit or call (800) 633-4227.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit Jim Miller is a regular contributor to the NBC Today Show and author of “The Savvy Senior” book.

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