Medicare Fund to Fall Short in 2026, Sooner Than Last Forecast

Health and Human Services Secretary Alex Azar is one of the trustees overseeing Medicare

Health and Human Services Secretary Alex Azar is one of the trustees overseeing Medicare

The Trump administration's response, essentially, is to take credit for the booming economy and cite it as a reason not to worry about the two biggest entitlement programs in the federal budget.

The Medicare trust fund will be depleted in 2026, the administration said.

At that time, there will be sufficient income coming in to pay 79% of scheduled benefits - a figure that's slightly higher than the 77% projected in last year's report.

The program is now expected to deplete its funds by 2026, down from last year's estimate of 2029. But the fund that helps tens of millions of retirees is expected to be depleted a year earlier than projected a year ago, while the outlook for the disability trust fund is more favorable.

More than 60 million Americans benefit from both programs, which provide a guaranteed income and healthcare for many retirees and the disabled.

The Social Security program will pass an ugly milestone this year, as its costs exceed its income, according to its trustees.

Sixty-two million people, including 45 million retired workers, were receiving OASDI benefits at the end of 2017.

Those living off of Social Security will not likely be "dancing in the streets" with the anticipated 3% COLA, Johnson said, despite the fact that over the past nine years the COLAs have averaged just 1.2%.

In 2017, Medicare covered 58.4 million people, with 49.5 million older than 65.

The trustees also noted that the gap between Social Security's costs and revenues over the next 75 years is equal to $12.5 trillion, up from $11.4 trillion in 2016.

Many Democrats, meanwhile, argue the problem is that the programs aren't generous enough.

The White House is required by law to tell Congress about how it will ensure Medicare's long-term solvency if official projections show a worsening in the program's long-term financing. Social Security and Medicare probably will never run out of money, in the sense that no Congress or president would let benefit checks be cut.

A new report is heightening concerns about the financial future of Medicare.

That fund pays hospital bills of medicare recipients. Options include raising the maximum income cutoff for imposing Social Security taxes, now $127,200.

Treasury Secretary Steven Mnuchin said in a statement that there's time to fix the problems. Legislative changes also contributed to the expected shortfall, according to a report from the program's trustees.