Social Security, Medicare: We have your check-up results

WASHINGTON (AP) – Looking at the big picture, the financial health of Social Security and Medicare doesn’t appear to have worsened.

The annual check-up found that Social Security’s retirement trust fund has enough money to pay full benefits until 2035, a year later than previously projected. Medicare’s giant trust fund for inpatient care won’t be exhausted until 2030, the same date as last year’s report.

But below those reassuring projections, program trustees said there’s cause for concern. Some 11 million people who receive Social Security disability face steep benefit cuts next year — unless Congress acts. Medicare’s outpatient premium could go up dramatically for a subset of beneficiaries — about 7.5 million people.

And they warned that the time is now to make changes in the long-term financing of both programs.

Here are five things you need to know about the 2015 Social Security and Medicare trustees reports:

Disability Program

The disability trust fund is expected to run out of money late next year. That would trigger an automatic 19 percent cut in benefits.

The average monthly benefit for disabled workers and their families is $1,017. That means the typical beneficiary would see benefits reduced by $193 a month.

Cost-of-Living Adjustment

Unlike most private pensions, Social Security benefits have built-in inflation protection.

The average Social Security check is $1,220 a month, and beneficiaries count on their annual cost-of-living adjustment, or COLA, to preserve the purchasing power of their benefits.

But the trustees projected there will be no COLA at the end of this year. It would mark only the third year without an increase since automatic adjustments were adopted in 1975.

Medicare Premiums

Some beneficiaries may face steep increases for Medicare Part B, which provides coverage for outpatient services.

For about 70 percent of beneficiaries, premium increases cannot exceed the dollar amount of their Social Security cost-of-living adjustment. Because no COLA is expected for 2016, increased costs of outpatient coverage would have to be spread among the remaining 30 percent.

That would result in an increase of about $54 in the base premium, bringing it to $159.30 a month. It works out to paying 52 percent more.

Social Security Price

Every year the Social Security and Medicare trustees deliver a sober warning: neither program is adequately financed for the long haul.

That means some combination of benefit cuts, tax increases, or in Medicare’s case, reining in health care costs, is needed to keep the programs in balance.

“Don’t focus on the date of trust fund depletion,” trustee Robert Reischauer admonished reporters. “Under current law, both of these vitally important programs are on a financially unsustainable path.”

The Basics

Nearly 60 million people receive Social Security benefits, including 42 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers.

About 55 million retirees and disabled people get Medicare. The hospital trust fund is only part of the program. Coverage for outpatient care and prescription drugs is covered by premiums and other government spending.

Medicare adds 10,000 new beneficiaries a day as baby boomers reach age 65.

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