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Social Security to tap reserves to cover 2018 benefits

10 June 2018

The U.S. government's healthcare program for the elderly will exhaust its reserves for hospital insurance in 2026, three years earlier than last year's forecast, the Social Security and Medicare Boards of Trustees said in a report on Tuesday. That is three years earlier than projected last year, Marketwatch noted. General revenues will finance roughly three-quarters of SMI costs, and premiums paid by beneficiaries nearly all of the remaining quarter. CMS is also increasing choice in Medicare Advantage, which will have new benefit choices in 2019.

The tax cuts are also projected to lead to a small revenue reduction in the short term for the hospital trust fund, though revenue is expected to grow again in the long run, officials said.

Both the cost-of-living increase and the Medicare outpatient premium are not officially determined until later in the year, and the initial projections can change.

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation.

The League reports that from January 2017 to January 2018, the costs of home heating oil has jumped 22% for people over 65, while the cost of Medigap premiums have spiked 16%.

Experts said the worsening outlook for Medicare's key hospital fund in part stems from policy changes that both increase spending and decrease revenue.

"Under the President's leadership, CMS will continue to provide access to high-quality services for seniors and use every regulatory pathway to strengthen the Medicare program", Verma said in a statement. The four top officials serve as the Social Security and Medicare trustees, along with two independent trustees who are supposed to represent the public.

"Social Security and Medicare are the federal government's two largest programs, and millions of Americans heavily rely on their benefits".

Social Security covers 62 million people, split among retired workers and their dependents, survivors of workers who've died and disabled people.

This is the first time that's happened since the Reagan admin. "The programs remain secure", Mnuchin said.

"However, certain long-term issues persist", the statement added. And 2017's Tax Cuts and Jobs Act is making the problem worse by cutting Medicare and Social Security taxes further reducing available revenues.

The trustees estimate that by 2034 the combined trust funds for Social Security - which help fund the old age and disability programs - will run dry.

"The HI fund again fails the test of short-range financial adequacy, as its trust fund ratio is already below 100% of annual costs, and is expected to decline continuously until reserve depletion in 2026", the report said.

Social Security to tap reserves to cover 2018 benefits