Medicare, Social Security now expected to run out quicker: See the dates and why

Social security benefits to rise 2.5% in 2025

Social Security recipients will receive a 2.5% increase in their monthly checks in 2025. Analysts had predicted a 2.5% bump for 2025, which is smaller than increases in the previous two years and reflects moderating inflation. Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.

Medicare and Social Security may be running out of money faster than previously predicted.

Rising health care costs and new legislation affecting Social Security benefits have contributed to earlier projected depletion dates, according to an annual report released Wednesday.

2033 and 2034

Dig deeper:

The date at which Medicaid will no longer have enough funds to pay full benefits has been pushed up from its predicted 2036 to 2034, according to the new report from the programs' trustees.

For Social Security, funds will be depleted by 2034. Previously, it was believed there would be enough funds to provide full benefits until 2035. 

What they're saying:

The trustees say the latest findings show the urgency of needed changes to the programs, which have faced dire financial projections for decades.

"Current-law projections indicate that Medicare still faces a substantial financial shortfall that needs to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers," the trustees state in the report.

Why you should care:

Once the fund’s reserves become depleted, Medicare would be able to cover only 89% of the costs of patients’ hospital visits, hospice care and nursing home stays or home health care that follows hospital visits. This could potentially impact about 68 million people who are currently enrolled in Medicare.

Income exceeded expenditures by nearly $29 billion last year for the hospital insurance trust fund, the report stated. Trustees expect that surplus to continue through 2027. Deficits will then follow until the fund becomes depleted in 2033.

The report states that the Social Security Fairness Act, enacted in January, which repealed the Windfall Elimination and Government Pension Offset provisions of the Social Security Act and increased Social Security benefit levels for some workers, had an impact on the depletion date of SSA's trust funds.

RELATED: Social Security's 2026 COLA: Recipients could get more money next year

Trump administration plans for Medicare, Social Security

The backstory:

President Donald Trump and other Republicans have vowed not to make any cuts to Medicare or Social Security, even as they seek to shrink the federal government’s expenditures.

Social Security Administration Commissioner Frank Bisignano, sworn into his role in May, said in a statement that "the financial status of the trust funds remains a top priority for the Trump Administration."

Congressional Budget Office reporting has stated that the biggest drivers of debt rising in relation to GDP are increasing interest costs and spending for Medicare and Social Security. An aging population drives those numbers.

Several legislative proposals have been put forward to address Social Security's impending insolvency.

The other side:

Repealing the Windfall Elimination and Government Pension Offset provisions of the Social Security Act was "a political giveaway masquerading as reform," Romina Boccia, a director of Budget and Entitlement Policy at the libertarian CATO Institute, said.

"Instead of tackling Social Security’s structural imbalances, Congress chose to increase benefits for a vocal minority—accelerating trust fund insolvency," she said.

"It’s a clear sign that populist pressure now outweighs fiscal responsibility and economic sanity on both sides of the aisle," Boccia added.

Pair that with a Republican reconciliation bill that increases tax giveaways while refusing to rein in even the most dubious Medicaid expansions, and the message is unmistakable: Washington is still in giveaway mode.