The years there was no COLA at all

Three times since 1975 the cost-of-living adjustment has come out at zero. Benefits did not fall — the statute does not permit that — but they did not rise either, and in two of those years the Medicare premium was the story rather than the adjustment.

Zero years

3out of 51

Consecutive run

22010 and 2011

Years affected after

3by the base carry-forward

Lost on a $2,000 benefit

$0per zero year

Why zero and not a cut

The computation is a percentage increase between two quarterly averages. If the comparison average does not exceed the base, the arithmetic gives a negative number — and the statute stops there. The result is zero, benefits hold at the prior rate, and no reduction is ever applied.

That floor is the whole reason the base quarter has to be carried forward. Reset it to the zero year and the price movement inside that year would be measured from the wrong starting point at the next adjustment. The carry-forward rule, worked in full.

The three years

In each case the comparison average sat below the base — prices as measured by CPI-W had not risen across the window. The largest shortfall was 2.09% below the base.

The Medicare consequence, which is the real cost of a zero year

Hold harmless caps the Part B premium increase at the beneficiary’s own dollar adjustment. In a zero year that dollar adjustment is zero, so the premium cannot rise at all for anyone whose premium is withheld from a Social Security payment and who is not paying an income-related adjustment.

That protection has a bill attached. The cost of running the programme does not pause, so it falls on the minority who are not protected — people new to Medicare, people paying income-related premiums, people not yet drawing Social Security — and the standard premium for that group rises much faster than it otherwise would. A zero adjustment year is comfortable for most beneficiaries and expensive for a specific few. How the cap works, and its four exclusions.

What a zero year costs over time

The single-year cost of a zero adjustment is exactly nothing in nominal terms — the payment is unchanged. The real cost is that the base of every subsequent year is lower than it would have been if prices had risen and been matched. Because the comparison quarter carries forward, though, the arithmetic does eventually catch up: the year after a zero measures against the last quarter that produced an adjustment, so a price rise deferred is a price rise still counted.

The two years where that catch-up is visible are 2011 and 2012 and 2017. Both are small adjustments that would have looked very different computed year-over-year.

Common questions

Related

• Every adjustmentsince 1975
• Highest and lowestthe extremes
• The base quarterthe carry-forward
• Hold harmlessthe premium cap
• 2010zero
• 2011zero
• 2016zero