Over the last several months, federal lawmakers have been debating ways to solve the federal budget deficit. One measure that has received serious discussion is tying all federal benefits -- including Supplemental Security Income and Social Security disability -- to the chained consumer price index, or chained CPI. This is a measure of inflation that would be used to set increases in benefits for cost-of-living adjustments, which impacts many Pennsylvania families.
The chained CPI is reportedly more responsive to fluctuations in consumer behavior than the current measures of inflation used to adjust benefits. Supporters of switching to the new CPI say that it will help solve many of the shortfalls in federal benefit programs. Unfortunately, this measure would wind up hurting those who rely on benefits, according to observers.
Instituting this change would result in a gradual reduction of disability benefits. Specifically, beneficiaries would see a 3 percent cut every 10 years. So, if a person becomes disabled at a relatively young age, they will see a 9 percent loss of benefits after 30 years.
Those who qualify for Supplemental Security Income generally have a small amount of regular income. For those who already have minimal financial resources and are physically unable to work, even a 3 percent cut in benefits over 10 years could be devastating. This is why many are cautioning against using the chained CPI.
At this point, it is uncertain how Congress will act. In the mean time, those who are in need of disability benefits would likely be best served by determining what options they have to gain a better sense of financial security.
Source: Bloomberg BNA, "Chained CPI Would Unfairly Cut Social Security Benefits, Speakers Say," March 12, 2013