By: Paul Frost

Each year, retirees and surviving spouses get a cost-of-living adjustment (COLA) to retired pay, survivor benefit plan annuity, Social Security, VA disability compensation, and Dependency and Indemnity Compensation (DIC). COLA is computed based upon the change in Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from one fiscal year to the next.

The CPI-W is updated monthly; as of the July update – which reflects June figures – it has risen 5.1% this fiscal year. If that figure holds through the end of the fiscal year in September, it would represent the largest COLA increase since a 5.8% bump in 2008. Beneficiaries would see a $51 increase on every $1,000 of benefit. Great news, right?

[TRACK THE CPI-W: MOAA’s COLA Watch]

Unfortunately, many recipients forget COLA also impacts what we pay for health care. TRICARE Prime/Select enrollment fees and co-pays are adjusted each year dependent upon COLA increases. If 5.1% holds true, you can expect a 2022 TRICARE Prime annual enrollment fee of $637 (up from $606 in 2021) and a 2022 TRICARE Select fee of $315 (up from $300).

The actual increase to the TRICARE Prime enrollment fee over the past two years has been slightly less than COLA (TRICARE Select imposed an enrollment fee for the first time in 2021). For example, TRICARE Prime enrollment increased 1% from 2020 to 2021 instead of the 1.3% COLA and increased only 0.5% from 2019 to 2020 instead of 1.6%.

An educated guess, for planning purposes, would put the $637 and $315 enrollment fees cited above for Prime and Select in 2022 as the increase ceiling on those figures.

Medicare Part B premiums, while not tied directly to CPI-W, do increase annually based on economic factors, including the cost of the Medicare program. These income-based premiums increased 2.9% for the lowest income bracket in 2021.

No one is going to sneeze at a COLA increase larger than we may have seen in over 14 years – we will know our increases by mid-October. The unfortunate downside is that COLA also impacts our health care costs.