Due to a stronger-than-expected economy, Medicare can pay full benefits for five more years than previously projected, and Social Security can pay full benefits for one additional year.
That’s according to the latest annual report from the Social Security and Medicare Boards of Trustees, released this week by the U.S. Department of the Treasury—joined by Departments of Health and Human Services and Labor, the Centers for Medicare & Medicaid Services, and the Social Security Administration.
The 2024 annual report, released May 6, found the Part A Hospital Insurance fund will be able to pay all its bills until 2036, five years later than reported last year and eight years later than the 2022 estimate. In 2036, the trust fund still would be able to cover 89% of Medicare costs with incoming tax revenue.
“This year’s report is a measure of good news for the millions of Americans who depend on Social Security, including the roughly 50% of seniors for whom Social Security is the difference between poverty and living in dignity — any potential benefit reduction event has been pushed off from 2034 to 2035,” said Martin O’Malley, Commissioner of Social Security. “More people are contributing to Social Security, thanks to strong economic policies that have yielded impressive wage growth, historic job creation, and a steady, low unemployment rate. So long as Americans across our country continue to work, Social Security can — and will — continue to pay benefits.”
O’Malley added that Congress can and should take action to extend the financial health of the Trust Fund into the foreseeable future, just as it did in the past on a bipartisan basis. “Eliminating the shortfall will bring peace of mind to Social Security’s 70 million-plus beneficiaries, the 180 million workers and their families who contribute to Social Security, and the entire nation,” he said.
“It’s good news that Medicare and Social Security can pay full benefits for longer, but it’s cold comfort to the millions of seniors who are still staring at financial insecurity when these programs become insolvent,” said Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) in a statement.
Whitehouse is pushing for the “Medicare and Social Security Fair Share Act,” originally introduced by Whitehouse and Congressman Brendan F. Boyle (D-PA). The Centers for Medicare and Medicaid Services Office found the legislation, which uses the same Medicare revenue proposals as those included in President Biden’s Budget Request for Fiscal Year 2024, would extend the Medicare Hospital Insurance trust fund’s solvency indefinitely. According to the Social Security Administration’s Office of the Chief Actuary, the legislation would also extend Social Security solvency indefinitely.
“My Medicare and Social Security Fair Share Act would protect full Medicare and Social Security benefits forever by unrigging our tax code,” Whitehouse said. It’s a win-win: without raising taxes a single penny on those making less than $400,000, we can protect our bedrock retirement programs and honor our promise to older Americans to retire with dignity.”
This Congress, Chairman Whitehouse has held hearings focused on “making the wealthy pay their fair share” to shore up Medicare and Social Security, according to his May 6 press release.
Reasons for Medicare fund improvement
The Medicare report attributes the improvement in its financial situation to several factors:
• Higher payroll tax income because the number of covered workers and average wages are projected to be higher.
• Spending for inpatient hospital and home health agency services that were lower than previously expected.
• A change in how Medicare Advantage rates were set starting in 2024.
“Social Security is the largest source of retirement income for most retirees, and Medicare is the primary and only source of health care for most people age 65 and older,” AARP CEO Jo Ann Jenkins said. “Older Americans make up the nation’s largest voting bloc and will hold leaders in Washington accountable if they fail to protect these programs.”
The trustees say that the Supplementary Medical Insurance (SMI) trust fund, which includes Part B doctors’ services and outpatient care and Part D prescription drugs, will have enough money indefinitely because premiums and federal contributions are automatically adjusted each year to cover costs.
The trustees project that the monthly premium for Medicare Part B will increase to $185 in 2025, up from $174.70 in 2024 and $164.90 in 2023. The 2025 Part B premium will be finalized in the fall.
In 2023, Medicare covered 66.7 million people, including 59.1 million people 65 and older and 7.6 million disabled people. By January 2024, the latest information available, 67 million were enrolled in Medicare, according to the Centers for Medicare & Medicaid Services.
The number of Medicare beneficiaries has doubled in the past 35 years and is expected to go up 39 percent in the next 35 years and to almost 94 million in 2060, the trustees report says.
The Social Security Report is available here, and the Medicare Trustees Report is available here. A fact sheet summarizing the reports can be viewed here – PDF.
