Social Security disability fund projected to run dry in 2016

The sooner Congress acts to fix the two programs’ long-term financial problems, the more options lawmakers will have, he added.

The Medicare and Social Security trustees are the secretaries of the Treasury, Health and Human Services, and Labor departments, as well as the Social Security commissioner and two public trustees – a Democrat and a Republican.

Currently, the disability trust fund will run out of money in late 2016, and that would trigger an automatic 19 percent cut in benefits. Failure to do so would be nothing short of devastating to millions of workers with disabilities and their families and would erode Americans’ confidence in Social Security. The typical beneficiary would see a reduction of $193 a month.

In more bad news for beneficiaries, the trustees project there will be no cost-of-living increase in benefits at the end of the year.

The annual report card on the financial health of Social Security and Medicare shows that the federal government’s largest benefit programs are feeling the strain of aging baby boomers as they both approach milestone anniversaries. After all, Social Security has not missed a payment in 80 years of existence.

A slowdown in healthcare spending has shored up the funding outlook for the federal program that pays elderly Americans’ hospital bills, trustees of the program said on Wednesday.

If the trust funds were combined, they would have enough money to pay full benefits until 2033, the trustees said previous year. After that point, the program will be able to pay just 79 percent of promised benefits.

The trust fund for Medicare hospital insurance will be depleted by 2030, unchanged from previous year. At that point, payroll taxes would cover 77 percent of benefits.

This is likely only the beginning of Social Security shortfalls.

The Obama administration has proposed shifting an additional 0.9% of payroll to the disability trust fund. That would keep the disability system above water for a couple of decades – buying time for other reforms.

Congressional Republicans, however, have said that they are not interested in redirecting revenues to the disability trust fund without addressing the underlying fiscal problems.

In January, Sen. Rand Paul, R-Ky., suggested that a lot of slackers are on disability. Compared with last years forecasts, the projections for Medicares total costs were little changed over the next 20 years but are considerably lower over the long run due to technical and policy changes. But as the deadline gets closer, advocates say the need to act becomes more urgent. Thanks to interest from the Treasuries and taxes on higher-earning beneficiaries, the Social Security system still takes in a bit more money than it pays out each year.