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Social Security to go up 3 percent

Social Security recipients will get a 3 percent increase in their monthly checks next year, the smallest cost-of-living adjustment in six years and well below the pace of medical costs.

The increase, made automatically to keep up with consumer prices, will benefit 40-million Americans on Social Security, as well as 4-million who receive welfare payments under the Supplemental Security Income program for the aged, blind and disabled.

The increase is worth $19 a month for the average retired worker, whose monthly benefit will rise to $653, from the current $634.

At the same time, the government announced Thursday that the monthly Medicare premium would increase to $36.60, from $31.80. The premium buys health insurance to cover doctors' services under Part B of Medicare. Part B is voluntary, but more than 33-million people are enrolled. The premiums typically are deducted from Social Security checks.

Congress set the amount of premiums for 1991 to 1995 in a 1990 law. The premiums are supposed to cover 25 percent of the cost of Part B of Medicare for the elderly. General tax revenues cover the remainder.

Health costs are rising about twice as fast as consumer prices, which rose 0.1 percent in September, the government reported Thursday. So economists say the new increase in Social Security benefits will not keep up with the rise in medical costs.

George Higgins, an 87-year-old retiree in McLean, Va., said growing medical care expenses, particularly the cost of prescriptions, represent the largest monthly expense for his wife and himself.

"The COLA helps keep one from going further into hock," Higgins said. "But the COLA, as nice as it is, is not enough."

Higgins also said that incomes of many of his retirement community neighbors have been cut by falling interest rates.

"While a low inflation rate is good news, it is overshadowed by the fear of many older Americans who live on fixed incomes and are plagued by higher health care costs and lower interest income from savings and investments," said Horace B. Deets, executive director of the American Association of Retired Persons.

The Social Security Administration gave these examples of how the 3 percent increase will affect average monthly benefits:

For an elderly couple, both getting benefits, the monthly check will be increased $32, to $1,106.

For a widow with two children, the average benefit will increase $38, to $1,288 a month.

For an elderly widow or widower living alone, the average monthly payment will rise $18, to $608.

For a disabled worker with a spouse and children, the average monthly benefit will rise $31, to $1,076.

For a worker retiring at the age of 65, the maximum Social Security benefit, $1,088 a month this year, will be $1,128 next year. The maximum federal payment under Supplemental Security Income, now $633 for a couple, will be $652 next year.

The maximum earnings subject to Social Security and Medicare payroll taxes will also increase. The employer and employee each pay a Social Security tax equal to 6.2 percent of the first $55,500 of earnings this year. The Medicare tax is 1.45 percent of the first $130,200 of earnings.

Next year the maximum amount subject to the Social Security tax will be $57,600, while the wage base for Medicare will be $135,000.

Five-million people in other federal programs will get the same 3 percent increase in benefits given to Social Security recipients.

Among those getting the cost-of-living adjustment are 2.2-million people who receive Civil Service retirement pay, 1.7-million who get military retirement pay and more than a million veterans who receive pensions based on financial need.

_ Information from the New York Times and the Associated Press was used in this report.