06 Jun Social Security and Medicare Financial Deficit Is Near

Social Security benefits will face a significant cut if lawmakers do not act now to fix the program’s long-term funding shortfall.

The trustees of Social Security and Medicare released their annual report which outlined this future deficit.

CNN reported, “The trustees estimate that by 2034 the combined trust funds for Social Security — which help fund the old age and disability programs — will run dry. At that point Social Security will be able to pay only 79% in promised benefits to retirees and disabled beneficiaries.”

What does this 21% cut mean for beneficiaries? Those who are awarded a $2,000 monthly benefit would only be seeing $1,580.

Not only is Social Security expected to run dry in 16 years, but Medicare is facing a similar fate. According to the report, Medicare Part A funds will be depleted by 2026. This encompasses the cost for hospitals, nursing facilities, and hospice care. At that time, the revenue will only allow for 91% of costs to be covered.

Medicare Part B helps beneficiaries to pay for physician and outpatient expenses. According to CNN, this is “funded by a combination of premium payments and money from general federal revenue. The same is true of Part D, which offers prescription drug coverage.” While this program is not expected to exhaust finances, the cost will be affected; “Both will be financed in full indefinitely, but only because the law requires automatic financing of them. Their costs, however, are scheduled to grow from 2.1% of GDP in 2017 to 3.6% in 2037.”

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