On April 22, the Social Security and Medicare Trustees released their annual reports, which outline their projections for each program. The headline results are unchanged from last year — the programs are facing serious financial difficulty in the near future. Social Security’s Old-Age and Survivors Insurance Trust Fund is expected to become depleted in 2034, and Medicare’s Hospital Insurance Trust Fund would become depleted in 2026.
However, it is critical to note that those latest reports do not include any adjustments to account for the effects of the coronavirus (COVID-19) pandemic. We can expect a major decline in the size of the economy in 2020, as well as reduced income for the two trust funds as millions of individuals are currently out of work.
The trustees did not have enough data or time to incorporate those significant effects into their projections this year, but next year’s reports could show that depletion of the Social Security and Medicare trust funds will occur even sooner than 2034 and 2026, respectively. And when depletion occurs, absent legislative changes, millions of individuals will face an immediate cut in their Social Security benefits and the payments to their medical providers from Medicare would be reduced. Those cuts would affect some of the most vulnerable Americans.