Social Security and Medicare Trust Funds Get Reprieve

May 8, 2024 — There is some rare good news for both Social Security and Medicare – their trust funds will run out of money later rather than sooner. The date when the Medicare funds will be exhausted has been pushed out 5 years, to 2036. Social Security got a 1 year reprieve, and its trust fund will now run out of money in 2035. The news comes from the just published annual reports of the funds’ Trustees.

The main reason cited for the improvement in the Trust funds is an improved economy and labor market. More people are working and contributing taxes into the programs. Medicare has also made some technical improvements that have reduced expected expenses.

The underlying problem for both programs remains, unfortunately. When the Trust funds are exhausted, the only money currently available to pay benefits will come from taxes by current workers. Those will not be adequate to pay all benefits – only 83% would be available to pay combined retiree and disability benefits in 2035. The Medicare Hospital Insurance Trust Fund is now expected to run out of money in 2036, 5 years later than the Trustees estimated in last year’s report. Those funds go to pay hospital bills for Medicare patients. Once the trust funds are exhausted, benefits will either have to be cut, or be supplemented with money from the U.S. Treasury.

No solutions coming

President Biden has said he intends to protect both programs, although no legislation seems forthcoming. Former President Trump has made conflicting comments on the issue. Meanwhile most politicians in both parties have had their heads in the sand on the issue, with no progress on changes that might be able to avoid future benefit cuts or infusions from the government.

For further reading:

Larson and Cassidy Named Legislators of the Year for Their Work on Social Security