Medicare fund will pay full benefits for extra five years
Strong economy means the fund should be in a solid position until 2036.
Medicare’s hospital insurance trust fund will be able to pay full benefits until 2036, five years later than projected a year ago, according to a report released Monday by the Treasury Department.
The hospital fund’s long-term financial picture improved thanks to higher income, stemming from both an increased number of workers and higher average wages, as well as from lower expenditures compared to last year’s estimates.
From 2036, barring policy changes from Congress, the fund will only be able to pay 89% of total scheduled benefits, the report said.
Compared to last year, the findings reflect slightly more positive data in the 2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. The report offers a detailed look at the finances of the Medicare and Social Security programs.
SOCIAL SECURITY
The Social Security system’s retiree fund will be able to fully pay scheduled benefits until 2033, a separeate report said, in line with last year’s estimates. At that point, continuing program income will be sufficient to pay just 79% of total scheduled benefits.
Despite the improvement on the Medicare side, the reports still serve as a warning, according to Michael Peterson, chief executive officer of the Peter G. Peterson Foundation, a watchdog group.
“Today’s Trustees reports drive home the fact that the clock is ticking down on automatic cuts to Social Security and Medicare,” he said in a statement. “It’s actually harmful to promise not to touch these essential programs, because failing to act will mean significant, immediate cuts that affect millions of Americans.”
The difference between Medicare’s total outlays and its financing sources is expected to exceed 45% of outlays within seven years, the report said. This triggers a “Medicare funding warning,” requiring the president to submit legislation to Congress to address the warning within 15 days after the fiscal 2026 budget is submitted.
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