Retirement Matters
October 2024
The 2025 Social Security (SS) Cost of Living Adjustment (COLA) — The SS COLA is estimated to increase by 2.5 percent, according to the nonprofit Senior Citizens League. COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It is based on average prices of household items like food, housing, and transportation. The new year COLA is determined by the previous year’s 3rd quarter data from July to September. The 2.5 percent preliminary estimate is based on July and August 2024 data and will be finalized when September prices become available. This 2.5 percent inflation rate is more like those we experienced during the pre-pandemic, with nearly flat inflation from 2001 to 2020, averaging 2.2 percent. This 2025 estimated 2.5 percent COLA would increase the average benefit for a retired worker of $1,920 monthly by $48 monthly, beginning January 2025. Watch for the November SERA-Nade for the official COLA rate increase, to be officially announced on October 10, 2024.
Current Congress Least Productive — In August 2024, National Public Radio (NPR) reported that the Congress limped toward the end of a disappointing session, with just 78 laws enacted. This most recent 118th Congress (2023-2024) has been one of the least productive for passing legislation in decades. As far back as the 82nd Congress (1951-1952), Congress has reliably enacted more than 280 laws, over the two-year sessions.
Medicare Telehealth Benefits Expiring 12/31/24 — Here is just one example of how this trend of the U.S. Congress not enacting legislation results in Medicare beneficiaries not getting the health care they deserve. Medicare payment for telehealth services, or video-enabled medical care, will expire at the end of 2024 unless Congress acts. According to MarketWatch, health experts say that ending telehealth could lead to “chaos” for health care that is counted on by 67.4 million enrollees using Medicare.
The use of telehealth in regular Medicare increased significantly beginning with the COVID-19 health emergency, when 46.7 percent of Medicare beneficiaries received at least one telehealth service in the second quarter of 2020 (Kaiser Family Foundation 9/2024). Many marveled on how this new technology modernized needed health care without leaving home. Telehealth use has dropped since then, but is still almost two times more than before the pandemic. In the 4th quarter of 2023, 12.7 percent of those eligible received telehealth services. As a State employee retiree that receives Medicare Advantage (MA), you may have received covered telehealth benefits as MA is required to pay for all Part A and Part B services covered under regular Medicare. In addition, MA has some flexibility to offer more benefits like telehealth, than could be available from regular Medicare, but it’s too soon to know how your specific MA plan will be affected.
The U.S. Senate and House have held hearings and introduced bills but, with a few selected changes, these bills haven’t tried to make permanent changes to expand Medicare telehealth coverage, but to only provide temporary coverage through 2026. The Biden Administration is doing what it can by providing new access to Medicare telehealth for Medicare with a grant making it easier for licensed social workers to practice across state lines, and offering coverage for audio-only services. Without Congressional action, these provisions will be limited to the types of providers, services, and settings which were in place before the current flexibility was implemented. Advocates say that Medicare should work with health care providers to streamline the process, making it more cost effective, rather than ending the program.
State of Michigan Investment Board (SMIB) — The SMIB met on October 1, 2024, for the quarterly investment review of State pension funds. Jon M. Braeutigam, Chief Investment Officer, presented information that when public school employee and State employee pensions are fully paid off, by 2031 (given a 50% chance), the projected total of $3.8 billion in annual future contributions will no longer be required, freeing up these funds for other State uses. The cost of SERA’s request to lift the $300 annual cap on the pension cost of living adjustment hasn’t yet been determined by the actuaries and thus isn’t included in the $600 million contribution for the State Employees’ Retirement System (SERS).
State of Michigan Investments in Israel — During the public comment section of the October 1, 2024, SMIB meeting, over ten individuals spoke against SMIB’s investments in Israel. They included an academic, physician, psychologist, public teacher, State employee, fire fighter, and other State and public school retirees from various advocacy groups. They asked SMIB to divest from an $11 million investment in Israel bonds. They compared this disinvestment request to the SMIB divestment from Russian investments in March 2022, after Russia invaded Ukraine. These speakers said they opposed the use of their State retirement pensions to fund apartheid and genocide in Palestine. They asked SMIB to stop investing in Israel bonds, don’t renew these bonds upon maturity, and arrange a meeting between SMIB and the Coalition for a Free Palestine to discuss the steps needed to divest from Israel bonds.
Attorney General (AG) Works to Reduce Utility Rate Hikes — State employee retirees juggle to pay ever higher utility rate increases on fixed incomes, without adequate cost of living adjustments. Dana Nessel, Michigan’s AG, intervened and provided testimony on a Consumers Energy (CE) May 2024 request of $303 million for approval by the Public Service Commission (PSC). This October 2024 she recommended that regulators approve a rate increase of less than one-third of the request or a $82.9 million rate increase. The AG says “Michigan utility customers are already subjected to some of the nation’s highest electric rates, lowest standards of reliability and service, and utility partners who only ever ask for more and more from increasingly dissatisfied customers.” If approved in full, residential customers would see an average rise of about 8.2 percent.
CE also requested $21.8 million for a 12-month customer surcharge related to deferred costs starting in March 2025. The AG showed that 70 percent of the request is excessive and unjustified. The PSC is pushing utilities to improve its distribution system planning due to concerns over the electric utility’s reliability and climate risks.
Editor’s note: Joanne Bump serves as feature columnist for “Retirement Matters.” Column content is time sensitive and is based on information as of 10/6/24. Joanne can be contacted by e-mail at joannebump@gmail.com.
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