How the Social Security Payment Increase Will Affect Businesses
Author: Katherine Crusse
On October 13th, the Social Security Administration announced that benefits will increase by 1.3% in 2022. This is the largest hike since 2017, when benefits increased by 2%. The last time benefits increased by less than 1.3% was in 2010. For business owners and entrepreneurs, it’s important to understand how this increase will affect your employees and your bottom line.
How the Social Security Payment Increase Will Affect Employees
For most people, the increase in Social Security payments will be a welcome change. According to an analysis by the Center on Budget and Policy Priorities, the average retired worker will see their monthly benefit increase by about $20 next year. For a disabled worker, the average increase will be about $16 per month. This may not seem like a lot of money, but for many people who are living on a fixed income, every little bit helps.
Of course, there are some exceptions to this rule. If you have employees who are receiving Social Security benefits and are also enrolled in Medicare, their premiums could go up next year. The standard Part B premium is currently $148.50 per month, but it could increase to as much as $153.30 per month in 2022. The standard Part D premium could also increase next year, although the full extent of those increases has not yet been announced.
How the Social Security Payment Increase Will Affect Businesses
The Social Security payment increase will have a ripple effect on businesses of all sizes. Employers who have employees enrolled in Medicare will see an increase in their payroll taxes next year. For example, if you have 10 employees enrolled in Medicare Part B, your payroll tax bill could go up by as much as $1533 next year.
In addition, businesses that offer health insurance to their employees will also see an increase in their costs next year. That’s because insurance companies typically factor in expected increases in Medicare premiums when they set their rates for employer-sponsored plans. So if you’re already struggling to afford health insurance for your employees, the 2022 rate increases could put your coverage options at risk.
From increased payroll taxes to higher health insurance premiums, the Social Security payment hike could have a significant impact on your business budget next year.