Last year marked a dark milestone for Medicare and Social Security, as both entitlement programs, for the first time in the same year, paid out more in benefits than they collected in revenue.

 

This development meant the federal government had to divert money from other government funds to make up the difference, thus adding to the budget deficit.

 

The Medicare trust fund is now projected to run out of money by 2024. After that, revenue from Medicare taxes will cover 90% of the program’s annual expenses. The percentage will decline to about 75% by 2045, before going back up to 88% by 2085.

 

Thanks to laws guaranteeing government funding, two aspects of Medicare, Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are not in danger of running out of money…unless Congress changes the law.

 

Social Security trust fund reserves are expected to last until 2036. Once the fund is exhausted, payroll taxes that pay for the program will only cover about 75% of annual retirement benefits. Last year also represented the first time that Social Security operated at a loss since 1983.

 

The program that is in the worst financial shape is the Disability Insurance program, which has been operating at a loss since 2005 and is expected to run out of trust fund money in 2018.

-Noel Brinkerhoff, David Wallechinsky

 

Medicare Funds Will Be Depleted in 13 Years, Report Says (by N.C. Aizenman, Washington Post)

A Summary of the 2011 Annual Reports (Social Security and Medicare Boards of Trustees)