Latest news with #trustfunds
Yahoo
an hour ago
- Business
- Yahoo
Social Security may run dry earlier than previously anticipated, trustees say
The trust funds for Social Security and Medicaid will run out of money in as little as 8 years, a shorter time frame than previously estimated, according to a report issued Wednesday by the programs' trustees. The Social Security fund will run dry in 2033, unless Congress combines the program's old-age and disability funds, in which case insolvency would arrive in 2034, the report found. A finding last year predicted Social Security would become insolvent in 2035 or 2036. Medicare's hospital insurance fund is expected to run out of money in 2033, the report said. MORE: Trump admin live updates: Trump to delay TikTok ban for 3rd time 'Social Security and Medicare are vital programs that support tens of millions of Americans across the country,' U.S. Secretary of Treasury Scott Bessent said in a statement. 'This data underscores the need for lawmakers to take action to support the long-term viability of these programs.' If Congress fails to address the projected budget shortfalls, automatic cuts will dial back Social Security benefits by 23% and Medicare hospital benefits by 11% in 2033, the report found. Roughly 66 million Americans receive medical coverage through Medicare, while 70 million people are set to receive Social Security benefits this year. The Social Security and Medicare trust funds generate revenue through a payroll tax paid by employees and employers, setting the income apart from the overall federal budget. The programs routinely spend more money than they take in through such taxes. President Donald Trump has vowed to safeguard Social Security and Medicare, even as the White House pursues spending cuts at other federal programs and agencies. The Department of Government Agency, formerly led by Elon Musk, sought to eliminate what it described as 'waste, fraud and abuse' in Social Security and Medicare. In March, the White House backed such efforts in a memo. MORE: Fed holds interest rates steady, defying Trump Last year, the Government Accountability Office, a federal agency, estimated that taxpayers lose as much as $521 billion annually to fraud, much of which occurs in entitlement programs like Medicare. The Centers for Medicare and Medicaid Services (CMS) have stopped more than $100 billion in potentially fraudulent expenditures over recent months, the agency said in a statement. Still, those possible savings make up a fraction of roughly $1.9 trillion in spending for Medicare and Medicaid in 2023, the most recent year for which data is available. 'Medicare provides essential coverage for millions of American seniors, but this year's report underscores the urgent need for serious, sustained reform to secure its long-term future,' CMS Administrator Mehmet Oz said in a statement.
CNN
7 hours ago
- Business
- CNN
Social Security won't be able to pay full benefits in 2034 if Congress doesn't act
Social Security will not be able to fully pay monthly benefits to tens of millions of retirees and people with disabilities in 2034 if lawmakers don't act to address the program's pending shortfall, according to an annual report released Wednesday by Social Security's trustees. The combined Social Security trust funds – which help support payments to the elderly, survivors and people with disabilities – are expected to be exhausted in 2034, one year earlier than previously forecast, according to the trustees' annual report. At that time, payroll tax revenue and other income sources will only be able to cover 81% of benefits owed. The deterioration in the forecast stems from several factors, including a law passed by Congress last year that increased benefits for certain workers and the trustees' assumption that it will take longer for the nation's fertility rate to recover from historically low levels. Average earnings are expected to grow somewhat more slowly over the coming decade, according to the report. Medicare's fiscal outlook also worsened. Its hospital insurance trust fund, known as Medicare Part A, is expected to be able to cover scheduled inpatient hospital benefits until 2033, compared to 2036 in last year's report from the program's trustees. At that time, Medicare will only be able to pay 89% of total scheduled Part A benefits, which also cover hospice care, short-term skilled nursing facility services and home health services following hospitalizations. The program's trustees project that Medicare's trust fund will be drained sooner because of increased medical spending in 2024, which also raised the forecast for future expenditures. Plus, the trustees raised their assumed growth level of inpatient and hospice services in coming years. Medicare Part B, which covers physician services and medical supplies, and Part D, which covers prescription drugs, are financed through beneficiary premiums and federal contributions that are adjusted annually to cover costs. Their trust fund is fiscally sound. The Medicare trustees are projecting that the standard monthly Part B premium will jump to $206.50 in 2026, from $185. The amount will not be finalized until later this fall. The driving factor in the quickening of Social Security's trust fund insolvency is Congress' passage late last year of a bipartisan bill that increased benefits for nearly 3 million federal, state and local employees. The Social Security Fairness Act eliminated two policies that had reduced Social Security payments for public sector workers. Experts had warned the measure would hurt the program's finances. It was a 'political giveaway masquerading as reform,' Romina Boccia, director of budget and entitlement policy at the libertarian Cato Institute, said in a statement. 'Instead of tackling Social Security's structural imbalances, Congress chose to increase benefits for a vocal minority — accelerating trust fund insolvency by 6 months in the process,' Boccia said. 'It's a clear sign that populist pressure now outweighs fiscal responsibility and economic sanity on both sides of the aisle.' Looking solely at the trust fund that covers retirement and survivor benefits, Social Security will only be able to afford scheduled payments in full until 2033, three fiscal quarters earlier than last year's projection. At that time, the fund's reserves will be depleted, and continuing income will cover only 77% of benefits owed. The Disability Insurance Trust Fund is expected to be able to cover full benefits at least through 2099, when the projection period ends. Merging the two trust funds would require an act of Congress, but the combined projection is often used to show the overall status of the program. Just over 60.1 million people received Social Security retirement and survivors benefits at the end of 2024, while 8.3 million Americans received disability benefits, according to the program's trustees. Some 67.6 million people were enrolled in Medicare. Social Security and Medicare have long been on shaky financial ground, largely because the nation's population is getting older and living longer. The number of beneficiaries is ballooning, but fewer workers are paying into the programs. Also, health care usage and spending are growing. Social Security and Medicare, however, will not run out of money since current workers are paying payroll taxes, which support the programs. The problem is that the revenue will not be enough to fully cover the benefits owed after the trust funds run dry. Still, the trustees' dire warnings are not likely to spur Congress to act any time soon, experts say. GOP lawmakers, who control both chambers, are focused on passing President Donald Trump's agenda bill. The president, meanwhile, has not released any proposals for extending the life of the entitlement programs' trust funds, promising only not to cut Social Security and Medicare as part of his megabill. 'Any politician who doesn't support increasing Social Security's revenue is, by default, supporting benefit cuts,' Nancy Altman, president of Social Security Works, an advocacy group, said in a statement. The longer lawmakers wait to address the looming shortfall, the fewer options they will have, experts say. 'As the date gets closer and closer, Congress really needs to start getting more focused,' said Bill Sweeney, senior vice president for government affairs at AARP. 'The American public expects them to get focused on this, to protect the money that they've earned.' Options to address Social Security's fiscal issues include raising the payroll tax rate; delaying the ages when people can start collecting benefits or receive their full retirement payments; increasing the amount of income subject to the payroll tax; and curtailing benefits or the rate at which they increase annually, among other proposals. 'Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare,' the trustees wrote in a message to the public.
Associated Press
9 hours ago
- Business
- Associated Press
Medicare and Social Security go-broke dates pushed up due to rising health care costs, new SSA law
WASHINGTON (AP) — The go-broke dates for Medicare and Social Security 's trust funds have moved up as rising health care costs and new legislation affecting Social Security benefits have contributed to earlier projected depletion dates, according to an annual report released Wednesday. The go-broke date — or the date at which the programs will no longer have enough funds to pay full benefits — was pushed up to 2033 for Medicare's hospital insurance trust fund, according to the new report from the programs' trustees. Last year's report put the go-broke date at 2036. Meanwhile, Social Security's trust funds — which cover old age and disability recipients — will be unable to pay full benefits beginning in 2034, instead of last year's estimate of 2035. After that point, Social Security would only be able to pay 81% of benefits. The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades. But making changes to the programs has long been politically unpopular, and lawmakers have repeatedly kicked Social Security and Medicare's troubling math to the next generation. President Donald Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government's expenditures. 'Current-law projections indicate that Medicare still faces a substantial financial shortfall that needs to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers,' the trustees state in the report. About 68 million people are enrolled in Medicare, the federal government's health insurance that covers those 65 and older, as well as people with severe disabilities or illnesses. Wednesday's report shows a worsening situation for the Medicare hospital insurance trust fund compared to last year. But the forecasted go-broke date of 2033 is still later than the dates of 2031, 2028 and 2026 predicted just a few years ago. Once the fund's reserves become depleted, Medicare would be able to cover only 89% of costs for patients' hospital visits, hospice care and nursing home stays or home health care that follow hospital visits. The report said expenses last year for Medicare's hospital insurance trust fund came in higher than expected. Income exceeded expenditures by nearly $29 billion last year for the hospital insurance trust fund, the report stated. Trustees expect that surplus to continue through 2027. Deficits then will follow until the fund becomes depleted in 2033. The report states that the Social Security Social Security Fairness Act, enacted in January, which repealed the Windfall Elimination and Government Pension Offset provisions of the Social Security Act and increased Social Security benefit levels for some workers, had an impact on the depletion date of SSA's trust funds. Social Security benefits were last reformed roughly 40 years ago, when the federal government raised the eligibility age for the program from 65 to 67. The eligibility age has never changed for Medicare, with people eligible for the medical coverage when they turn 65. Nancy Altman, president of Social Security Works, an advocacy group for the popular public benefit program said in a statement that 'there are two options for action: Bringing more money into Social Security, or reducing benefits. Any politician who doesn't support increasing Social Security's revenue is, by default, supporting benefit cuts.' Congressional Budget Office reporting has stated that the biggest drivers of debt rising in relation to GDP are increasing interest costs and spending for Medicare and Social Security. An aging population drives those numbers. Several legislative proposals have been put forward to address Social Security's impending insolvency. __ Associated Press reporters Amanda Seitz and Tom Murphy in Indianapolis contributed to this report.
CNN
9 hours ago
- Business
- CNN
Social Security won't be able to pay full benefits in 2034 if Congress doesn't act
Social Security will not be able to fully pay monthly benefits to tens of millions of retirees and people with disabilities in 2034 if lawmakers don't act to address the program's pending shortfall, according to an annual report released Wednesday by Social Security's trustees. The combined Social Security trust funds – which help support payments to the elderly, survivors and people with disabilities – are expected to be exhausted in 2034, one year earlier than previously forecast, according to the trustees' annual report. At that time, payroll tax revenue and other income sources will only be able to cover 81% of benefits owed. The deterioration in the forecast stems from several factors, including a law passed by Congress last year that increased benefits for certain workers and the trustees' assumption that it will take longer for the nation's fertility rate to recover from historically low levels. Average earnings are expected to grow somewhat more slowly over the coming decade, according to the report. Medicare's fiscal outlook also worsened. Its hospital insurance trust fund, known as Medicare Part A, is expected to be able to cover scheduled inpatient hospital benefits until 2033, compared to 2036 in last year's report from the program's trustees. At that time, Medicare will only be able to pay 89% of total scheduled Part A benefits, which also cover hospice care, short-term skilled nursing facility services and home health services following hospitalizations. The program's trustees project that Medicare's trust fund will be drained sooner because of increased medical spending in 2024, which also raised the forecast for future expenditures. Plus, the trustees raised their assumed growth level of inpatient and hospice services in coming years.
Washington Post
9 hours ago
- Business
- Washington Post
Social Security on track to run out of money by 2034, trustees say
The trust funds for Social Security and Medicare will run out of money in less than a decade, according to a report released Wednesday, as the programs' trustees warned that the funds' depletion date is significantly closer than predicted a year ago. If Congress does not overhaul the programs' financing, automatic cuts will slash Social Security benefits by 23 percent and Medicare hospital benefits by 11 percent in 2033, the report said.
