Medicare trust will be depleted by 2026, Social Security by 2034
A pair of reports released Monday by the Boards of Trustees of the federal Medicare and Social Security trust funds project difficult circumstances for the programs in the coming decades.
According to the latest projections, the Medicare Hospital Insurance Trust Fund will be depleted by 2026. Projections place the Social Security Trust Fund at the point of depletion in 2034, highlighting questions on the future of the two programs.
In Beaufort County, the latest statistics show that approximately 29 percent of the county’s residents depend on Social Security to some degree. Approximately 28 percent are enrolled in Medicare Part A and Part B.
According to January statistics from the Centers for Medicare and Medicaid Services, approximately 13,109 Beaufort County residents were enrolled in Medicare or Medicare Advantage plans.
Of these individuals, 10,420 were enrolled in Original Medicare, which consists of Part A/Part B plans. These plans help cover the costs of hospitalization and medical costs, respectively.
While Medicare Part B and Part D (prescription insurance) are equipped to sustain themselves through premiums that reset each year, the Medicare report estimates that expenditures will likely increase for these programs, outpacing worker earnings and the economy overall.
Medicare Part A is in a tougher spot. The report projects that tax income for hospital insurance will continue to fall short of expenditures in coming decades. According the report, the Medicare Part A trust fund will be depleted in 2026, three years earlier than projected in the 2017 report.
“The financial projections in this report indicate a need for substantial steps to address Medicare’s remaining financial challenges,” the report states. “Consideration of further reforms should occur in the near future. The sooner solutions are enacted, the more flexible and gradual they can be. Moreover, the early introduction of reforms increases the time available for affected individuals and organizations — including health care providers, beneficiaries, and taxpayers — to adjust their expectations and behavior.”
The latest statistics from the Social Security Administration, released in September 2017, indicate that 14,155 Beaufort County residents were receiving Social Security payments in December 2016.
Of these beneficiaries, 10,185 were collecting retirement benefits, 1,395 were widow(er)s or children who have lost a parent and 2,575 were collecting disability benefits.
“If substantial actions are deferred for several years, the changes necessary to maintain Social Security solvency would be concentrated on fewer years and fewer generations,” the Social Security report states.
As an example, the report states if changes were not enacted until 2034, it would require a permanent increase of the payroll tax to 16.27 percent and a permanent benefit reduction of 23 percent, in order to maintain the program’s solvency.
“The Trustees recommend that lawmakers address the projected trust fund shortfalls in a timely way in order to phase in necessary changes gradually and give workers and beneficiaries time to adjust to them,” the report states. “Social Security will play a critical role in the lives of 63 million beneficiaries and 175 million covered workers and their families during 2018. With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.”