U.S. Department of the Treasury

Taken in combination, Social Security’s retirement and disability programs have dedicated resources sufficient to cover benefits for nearly two decades, until 2034.  However, the projected depletion date for the separate Social Security’s Disability Insurance (DI) Trust Fund is only a little more than one year away, in late 2016. 

 

The Medicare Hospital Insurance Trust Fund will have sufficient funds to cover its obligations until 2030, the same year that was projected last year, and 13 years later than was projected in the last report issued prior to passage of the Affordable Care Act.

 

 

Taken in combination, Social Security’s retirement and disability trust fund reserves are projected to be exhausted in 2034, one year later than was projected in last year’s Trustees Report.  After trust fund exhaustion, annual revenues from the dedicated payroll tax and taxation of Social Security benefits will be sufficient to fund about three-quarters of scheduled benefits through 2089.   The 75-year actuarial deficit for the combined trust funds is estimated at 2.68 percent of taxable payroll, down from 2.88 percent of taxable payroll estimated in last year’s Report.  This improvement is due to new data and improved projection methods. 

 

Social Security’s Disability Insurance (DI) program faces the most immediate financing shortfall of any of the separate trust funds.  The DI Trust Fund reserves are projected to be depleted in late 2016, unchanged from last year’s estimate, after which time dedicated revenues are projected to cover 81 percent of scheduled benefit payments.  Legislation will be needed to address this financial imbalance.

 

The Medicare Hospital Insurance (HI) Trust Fund will have sufficient funds to cover its obligations until 2030, the same year that was projected last year, and 13 years later than was projected in the last report issued prior to passage of the Affordable Care Act.  The projected portion of scheduled benefits that can be financed with dedicated revenues is 86 percent in 2030, declines slowly to 79 percent in 2039, and then gradually increases to 84 percent in 2089.    The 75-year actuarial deficit in the HI Trust Fund is projected at 0.68 percent of taxable payroll, down from 0.87 percent projected in last year’s report.  The improved long-term outlook for HI is primarily due to a change in the projection methodology that results in a lower estimate for long-range health care cost growth for HI and other parts 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 both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs.  However, the aging population and rising health care costs cause SMI projected costs to grow steadily from 2.0 percent of GDP in 2014 to 3.4 percent of GDP in 2035, and then more slowly to 3.8 percent of GDP by 2089.  Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries.    

 

 

 

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