Status of the 

Social Security 

and Medicare 

Programs

A SUMMARY OF THE

2019 ANNUAL REPORTS

Social Security and Medicare

Boards of Trustees

2019
The Social Security and Medicare Trustees Reports, as well as

this document, are available at the following addresses:

Social Security (OASDI): www.ssa.gov/OACT/TR/2019/

Medicare (HI and SMI): www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/

Summary: www.ssa.gov/OACT/TRSUM/

Other information about Social Security benefits and services is available at

www.ssa.gov or by calling toll-free 1-800-772-1213.

Other information about Medicare benefits and services is available at

www.cms.gov or by calling toll-free 1-800-633-4227.
A MESSAGE TO THE PUBLIC:

Each year the Trustees of the Social Security and Medicare trust funds 

report on the current and projected financial status of the two programs. 

This message summarizes the 2019 Annual Reports.

Both Social Security and Medicare face long-term financing shortfalls 

under currently scheduled benefits and financing. Lawmakers have a 

broad continuum of policy options that would close or reduce the longterm financing shortfall of both programs. The Trustees recommend that 

lawmakers take action sooner rather than later to address these shortfalls, so that a broader range of solutions can be considered and more 

time will be available to phase in changes while giving the public adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income 

workers and people already dependent on program benefits.

Social Security and Medicare together accounted for 45 percent of Federal program expenditures (excluding net interest on the debt) in fiscal 

year 2018. The unified budget reflects current trust fund operations. Consequently, even when there are positive trust fund balances, any drawdown of those balances, as well as general fund transfers into Medicare’s 

Supplementary Medical Insurance (SMI) fund and interest payments to 

the trust funds that are used to pay benefits, increase pressure on the unified budget. Both Social Security and Medicare will experience cost 

growth substantially in excess of GDP growth through the mid-2030s due 

to rapid population aging caused by the large baby-boom generation 

entering retirement and lower-birth-rate generations entering employment. For Medicare, it is also the case that growth in expenditures per 

beneficiary exceeds growth in per capita GDP over this time period. In 

later years, projected costs expressed as a share of GDP rise slowly for 

Medicare and are relatively flat for Social Security, reflecting very gradual population aging caused by increasing longevity and slower growth in 

per-beneficiary health care costs.

Social Security

The Social Security program provides workers and their families with 

retirement, disability, and survivors insurance benefits. Workers earn 

these benefits by paying into the system during their working years. Over 
the program’s 84-year history, it has collected roughly $21.9 trillion and 

paid out $19.0 trillion, leaving asset reserves of $2.9 trillion at the end of 

2018 in its two trust funds.

The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays 

retirement and survivors benefits, and the Disability Insurance (DI) Trust 

Fund, which pays disability benefits, are by law separate entities. However, to summarize overall Social Security finances, the Trustees have traditionally emphasized the financial status of the hypothetical combined 

OASI and DI Trust Funds. The combined funds—designated OASDI—satisfy the Trustees’ test of short-range (ten-year) financial adequacy 

because the Trustees project that the combined fund asset reserves at the 

beginning of each year will exceed that year’s projected cost throughout 

the short-range projection period. However, the funds fail the test of longrange close actuarial balance.

The Trustees project that the combined trust funds will be depleted in 

2035, one year later than projected in last year’s report. The projected 

75-year actuarial deficit for the OASDI trust funds is 2.78 percent of taxable payroll, down from 2.84 percent projected in last year’s report. This 

deficit amounts to 1.0 percent of GDP over the 75-year time period, or 

21 percent of program non-interest income, or 17 percent of program 

cost. A 0.05 percentage point increase in the OASDI actuarial deficit 

would have been expected if nothing had changed other than the one-year 

shift in the valuation period from 2018 through 2092 to 2019 through 

2093. The effects of updated demographic, economic, and programmatic 

data, and improved methodologies, collectively reduced the actuarial 

deficit by 0.11 percent of taxable payroll, more than offsetting the effect of 

changing the valuation period.

Considered separately, the DI Trust Fund reserves become depleted in 

2052 and the OASI Trust Fund reserves become depleted in 2034. In last 

year’s report, the projected reserve depletion year was the same for OASI 

and 20 years earlier (2032) for DI. The change in the reserve depletion 

year for DI is largely due to continuing favorable experience for DI applications and benefit awards. Disability applications have been declining 

steadily since 2010, and the total number of disabled-worker beneficiaries in current payment status has been falling since 2014. Relative to last 

year’s Trustees Report, disability incidence rates are lower in 2018. They 
also are assumed to rise more gradually from the current levels to reach 

ultimate levels at the end of 10 years that are slightly lower. Accordingly, 

the projected Trust Fund depletion date is 20 years later and the 75-year 

actuarial deficit (0.12 percent of taxable payroll) is 0.09 percentage 

points lower than was projected last year. The depletion date change is 

large relative to the actuarial balance change because in last year’s 

report DI income was projected to be very near to DI cost for many years 

after the projected 2032 depletion date, so that a relatively small improvement in the program’s projected cash flow can have a large effect on the 

projected depletion date.

Social Security’s total cost is projected to exceed its total income (including interest) in 2020 for the first time since 1982, and to remain higher 

throughout the remainder of the projection period. Social Security’s cost 

will be financed with a combination of non-interest income, interest 

income, and net redemptions of trust fund asset reserves from the General 

Fund of the Treasury until 2035 when the OASDI reserves will become 

depleted. Thereafter, scheduled tax income is projected to be sufficient to 

pay about three-quarters of scheduled benefits through the end of the projection period in 2093. The ratio of reserves to one year’s projected cost 

(the combined trust fund ratio) peaked in 2008, generally declined 

through 2018, and is expected to decline steadily until the trust fund 

reserves are depleted in 2035.

Under current projections, the annual cost of Social Security benefits 

expressed as a share of workers’ taxable earnings will grow from 

13.8 percent in 2018 to roughly 16.6 percent in 2040, and will then 

decline slightly before slowly increasing after 2051. Expressed as a share 

of GDP, program costs equaled 4.9 percent of GDP in 2018, and the 

Trustees project these costs will increase to 5.9 percent of GDP by 2039, 

decline to 5.8 percent of GDP by 2052, and thereafter generally rise 

slowly, reaching 6.0 percent by 2093. 

Medicare 

The Medicare program helps pay for health care services for the aged, 

disabled, and individuals with end-stage renal disease. It has two separate trust funds, the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. HI, otherwise known as 

Medicare Part A, helps pay for inpatient hospital services, skilled nursing 
facility and home health services following hospital stays, and hospice 

care. The SMI Trust Fund consists of separate accounts for Medicare 

Part B and Part D. Part B helps pay for physician, outpatient hospital, 

home health, and other services for individuals who have voluntarily 

enrolled. Part D provides subsidized access to drug insurance coverage 

on a voluntary basis for all beneficiaries, as well as premium and costsharing subsidies for low-income enrollees.

The Trustees project that the HI Trust Fund will be depleted in 2026, the 

same year projected in last year’s report. At that time dedicated revenues 

will be sufficient to pay 89 percent of HI costs. The Trustees project that 

the share of HI cost that can be financed with HI dedicated revenues will 

decline slowly to 77 percent in 2046, and will then rise gradually to 

83 percent in 2093. The HI fund again fails the test of short-range financial adequacy, as its trust fund ratio is already below 100 percent of 

annual costs, and is expected to decline continuously until reserve depletion in 2026.

The HI Trust Fund’s projected 75-year actuarial deficit is 0.91 percent of 

taxable payroll, which represents 0.4 percent of GDP through 2093, or 

23 percent of non-interest income, or 19 percent of program cost. This 

estimate is up from 0.82 percent of taxable payroll projected in last year’s 

report. Several factors contributed to the change in the actuarial deficit, 

most notably lower assumed productivity growth (+0.10 percent of taxable payroll), slower projected growth in the utilization of skilled nursing 

home facilities (-0.10 percent), higher costs and lower income in 2018 

than expected (+0.04 percent), lower real discount rates (+0.03 percent), 

and other factors (+0.02 percent). 

For SMI, the Trustees project that both Part B and Part D will remain 

adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each 

year to meet the next year’s expected costs. However, the aging population 

and rising health care costs cause SMI projected costs to grow steadily 

from 2.1 percent of GDP in 2018 to approximately 3.7 percent of GDP in 

2038, and to then increase more slowly to 4.2 percent of GDP by 2093. 

General revenues will finance roughly three-quarters of SMI costs, and 

premiums paid by beneficiaries almost all of the remaining quarter. SMI 

also receives a small amount of financing from special payments by 
States, and from fees on manufacturers and importers of brand-name prescription drugs.

The Trustees project that total Medicare costs (including both HI and SMI 

expenditures) will grow from approximately 3.7 percent of GDP in 2018 

to 5.9 percent of GDP by 2038, and then increase gradually thereafter to 

about 6.5 percent of GDP by 2093.

Since 2008, national health expenditure (NHE) growth has been below 

historical averages, although it has generally continued to outpace 

growth of the economy. There is uncertainty regarding the degree to which 

this slowdown reflects the impacts of the most recent economic downturn 

and other non-persistent factors, as opposed to structural changes in the 

health care sector that may continue to produce cost savings in the years 

ahead. It is possible that U.S. health care practices are becoming more 

efficient as new payment models develop and providers anticipate less 

rapid growth of reimbursement rates in both the public and private sectors than has occurred during the past several decades.

For a number of years, the Trustees’ methodology for projecting Medicare 

finances over the long term has assumed a substantial reduction in per 

capita health expenditure growth rates relative to historical experience. 

In addition, since 2012 the Trustees have on balance revised down the 

projections for near-term Medicare expenditure growth in light of the 

recent favorable experience, which might in part be due to effects of payment changes and delivery system reform that are changing health care 

practices. The Trustees have not assumed additional long-term cost 

growth reductions arising from structural changes in the delivery system 

that may result from new payment mechanisms in the Medicare Access 

and CHIP Reauthorization Act of 2015 and the cost-reduction incentives 

in the Affordable Care Act, or from payment reforms initiated by the private sector.

Notwithstanding the assumption of a substantial slowdown of per capita 

health expenditure growth, the projections indicate that Medicare still 

faces a substantial financial shortfall that will need to be addressed with 

further legislation. Such legislation should be enacted sooner rather than 

later to minimize the impact on beneficiaries, providers, and taxpayers.
Conclusion 

Lawmakers have many policy options that would reduce or eliminate the 

long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible. Taking 

action sooner rather than later will permit consideration of a broader 

range of solutions and provide more time to phase in changes so that the 

public has adequate time to prepare.

By the Trustees:

STEVEN T. MNUCHIN, Secretary of the Treasury,

and Managing Trustee 

of the Trust Funds.

R. ALEXANDER ACOSTA, Secretary of Labor,

and Trustee.

ALEX M. AZAR II

Secretary of Health 

and Human Services,

and Trustee.

NANCY A. BERRYHILL, Acting Commissioner 

of Social Security,

and Trustee.
1

A SUMMARY OF THE 2019 ANNUAL SOCIAL SECURITY

AND MEDICARE TRUST FUND REPORTS

In 2018, Social Security’s reserves were $2.9 trillion at the year’s end, 

having increased by $3 billion. The Trustees project that under the intermediate assumptions, the Old-Age and Survivors Insurance (OASI) Trust 

Fund will be able to pay full benefits on a timely basis until 2034, 

unchanged from last year. The Disability Insurance (DI) Trust Fund is 

projected to be able to pay full benefits until 2052, 20 years later than 

indicated in last year’s Social Security report. Disabled-worker applications have continued to decline since 2010 and disability incidence rates 

have been well below expectations. Accordingly, the Trustees have 

reduced the long-range disability incidence rate assumption for this 

report. Lower numbers of disabled beneficiaries have caused the annual 

cost of the program to become much closer to annual income, making the 

DI Trust Fund reserve depletion date very sensitive to projected changes 

in program costs, leading to a large change in the depletion date. The projected depletion date for the combined OASI and DI funds is now 2035, 

one year later than in last year’s report.1 Over the 75-year projection 

period, Social Security faces an actuarial deficit of 2.78 percent of taxable 

payroll, decreased from the 2.84 percent figure projected last year. The 

actuarial deficit equals 1.0 percent of GDP through 2093.

Reserves in Medicare’s Hospital Insurance (HI) Trust Fund decreased by 

$2 billion to a total of $200 billion at the end of 2018. The Trustees project that the HI Trust Fund will be able to pay full benefits until 2026, 

unchanged from last year’s Medicare report. HI income is projected to be 

lower than last year’s estimates due to lower payroll taxes and reduced 

income from the taxation of Social Security benefits. HI expenditures are 

expected to be slightly higher than last year’s estimates because of higherthan-projected 2018 spending and higher projected provider updates. Provider payment rates are reduced by the growth in economy-wide productivity and the Trustees have assumed lower productivity growth in this 

year’s report. The HI actuarial deficit is 0.91 percent of taxable payroll 

over the 75-year projection period, 0.09 percentage point less favorable 

than projected in last year’s report, and equivalent to 0.4 percent of GDP 

through 2093. The Supplementary Medical Insurance (SMI) Trust Fund 

held $104 billion in assets at the end of 2018 and both parts (Part B and 

Part D) of SMI are expected to be adequately financed over the next 

10 years and beyond because premium income and general revenue 

income are reset each year to cover expected costs and ensure an adequate 

reserve for Part B contingencies. 

1 The OASI and DI Trust Funds are distinct legal entities which operate independently. The two trust 

funds are often considered on a hypothetical combined basis—designated OASDI—to illustrate the 

actuarial status of the program as whole. 
2

What Are the Trust Funds? Congress established trust funds managed 

by the Secretary of the Treasury to account for Social Security and Medicare income and disbursements. The Treasury credits Social Security and 

Medicare taxes, premiums, and other income to the funds. There are four 

separate trust funds. For Social Security, the OASI Trust Fund pays retirement and survivors benefits and the DI Trust Fund pays disability benefits. For Medicare, the HI Trust Fund pays for inpatient hospital and 

related care. The SMI Trust Fund comprises two separate accounts: 

Part B, which pays for physician and outpatient services, and Part D, 

which covers prescription drug benefits.

The only disbursements permitted from the funds are benefit payments 

and administrative expenses. Federal law requires that all excess funds be 

invested in interest-bearing securities backed by the full faith and credit of 

the United States. The Department of the Treasury currently invests all 

program revenues in special non-marketable securities of the U.S. Government which earn interest equal to rates on marketable securities with 

durations defined in law. The balances in the trust funds, which represent 

the accumulated value, including interest, of all prior program annual surpluses and deficits, provide automatic authority to pay benefits.

What Were the Trust Fund Operations in 2018? In 2018, 52.7 million 

people received OASI benefits, 10.2 million received DI benefits, and 

59.9 million were covered under Medicare. A summary of the trust fund 

operations is shown below (Table 1). The DI and SMI Trust Fund reserves 

increased in 2018; OASI and HI Trust Fund reserves declined.

Table 2 shows payments, by category, from each trust fund in 2018.

Table 1: TRUST FUND OPERATIONS, 2018

[In billions]

OASI DI HI SMI

Reserves (end of 2017) . . . . . . . . $2,820.3 $71.5 $202.0 $87.7

Income during 2018 . . . . . . . . . . 831.0 172.3 306.6 449.1

Cost during 2018. . . . . . . . . . . . . 853.5 146.8 308.2 432.4

Net change in reserves . . . . . . -22.4 25.6 -1.6 16.7

Reserves (end of 2018) . . . . . . . . 2,797.9 97.1 200.4 104.3

Notes: Totals do not necessarily equal the sum of rounded components.

Table 2: PROGRAM COST, 2018

[In billions]

Category OASI DI HI SMI

Benefit payments . . . . . . . . . . . . $844.9 $143.7 $303.0 $427.7

Railroad Retirement financial 

interchange . . . . . . . . . . . . . . . 4.8 0.2 — —

Administrative expenses . . . . . . 3.8 2.9 5.2 4.7

Total . . . . . . . . . . . . . . . . . . . . . . 853.5 146.8 308.2 432.4

Notes: Totals do not necessarily equal the sum of rounded components.
3

Trust fund income, by source, in 2018 is shown in Table 3.

In 2018, Social Security’s total income exceeded total cost by $3 billion, 

but when interest received on trust fund asset reserves is excluded from 

program income, there was a deficit of $80 billion. The Trustees now 

project that total cost will exceed total income (including interest) beginning in 2020 and thereafter. 

In 2018, the HI Trust Fund’s total income ($307 billion), including 

$7 billion of interest income (Table 3), fell short of program expenditures 

($308 billion). The Trustees project deficits in all years until reserves are 

depleted in 2026. For SMI, general revenues, which are set prospectively 

based on projected costs, are the largest source of income.

What Is the Outlook for Future Social Security and Medicare Costs 

in Relation to GDP? One instructive way to view the projected costs of 

Social Security and Medicare is to compare the costs of scheduled benefits and administrative expenses for the programs with the gross domestic 

product (GDP), the most frequently used measure of the total output of 

the U.S. economy (Chart A).

Under the intermediate assumptions employed in the reports, the costs of 

these programs as a percentage of GDP increase substantially through 

about 2035 because: (1) the number of beneficiaries rises rapidly as the 

baby-boom generation retires; and (2) the lower birth rates that have persisted since the baby boom cause slower growth of employment and GDP.

Social Security’s annual cost as a percentage of GDP is projected to 

increase from 4.9 percent in 2019 to about 5.9 percent by 2039, then 

decline to 5.8 percent by 2052 before generally rising to 6.0 percent of 

GDP by 2093. Under the intermediate assumptions, Medicare cost rises 

from 3.7 percent of GDP in 2019 to 5.7 percent of GDP by 2035 due

mainly to the growth in the number of beneficiaries, and then increases 

further to 6.5 percent by 2093. The growth in health care cost per benefiTable 3: PROGRAM INCOME, 2018

[In billions]

Source OASI DI HI SMI

Payroll taxes . . . . . . . . . . . . . . . $715.9 $169.2 $268.3 —

Taxes on OASDI benefits . . . . . 34.5 0.5 24.2 —

Interest earnings . . . . . . . . . . . . 80.7 2.6 7.1 $2.6

General Fund reimbursements . a a 1.6 -6.6

General revenues. . . . . . . . . . . . — — — 327.6

Beneficiary premiums . . . . . . . . — — 3.6 109.1

Transfers from States. . . . . . . . . — — — 11.7

Other . . . . . . . . . . . . . . . . . . . . . a — 1.8 4.6

Total. . . . . . . . . . . . . . . . . . . . . . 831.0 172.3 306.6 449.1

Notes: Totals do not necessarily equal the sum of rounded components. a Less than $50 million.
4

ciary becomes the larger factor later in the valuation period, particularly 

in Part D.

In 2019, the combined cost of the Social Security and Medicare programs 

is estimated to equal 8.7 percent of GDP. The Trustees project an increase 

to 11.6 percent of GDP by 2035 and to 12.5 percent by 2093, with most of 

the increases attributable to Medicare. Medicare’s annual relative cost is 

expected to rise gradually from 76 percent of the cost of Social Security 

in 2019 to become the more costly program by 2040. During the last 

35 years of the long-range period, Medicare is 5 to 7 percent more costly 

than Social Security.

The projected costs for OASDI and HI depicted in Chart A and elsewhere 

in this summary reflect the full cost of scheduled current-law benefits 

without regard to whether the trust funds will have sufficient resources to 

meet these obligations. Current law precludes payment of any benefits 

beyond the amount that can be financed by each of the trust funds, that is, 

from annual income and trust fund reserves. In years after trust fund 

reserve depletion, the amount of benefits that would be payable is lower 

than shown because OASI, DI, and HI, by law, cannot borrow money or 

pay benefits that exceed the asset reserves in their trust funds. The projected costs assume realization of the full estimated savings of the Affordable Care Act and the physician payment rate updates specified in the 

Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. As 

described in the Medicare Trustees Report, the projections for HI and 

 Chart A–Social Security and Medicare Cost as a Percentage of GDP

0%

2%

4%

6%

8%

10%

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

◄ Historical Estimated ►

HI + SMI

OASI + DI

◄ Historical
5

SMI Part B depend significantly on the sustained effectiveness of various 

current-law cost-saving measures, in particular, the lower increases in 

Medicare payment rates to most categories of health care providers.

What Is the Outlook for Future Social Security and Medicare HI 

Costs and Income in Relation to Taxable Earnings? Because the primary source of income for OASDI and HI is the payroll tax, it is informative to express the programs’ incomes and costs as percentages of taxable 

payroll—that is, of the base of worker earnings taxed to support each program (Chart B).

It is important to understand that the two programs have different taxable 

payrolls. HI taxable payroll is about 25 percent larger than that of OASDI 

because the HI payroll tax is imposed on all covered earnings while 

OASDI taxes apply only to earnings up to a maximum ($132,900 in

2019), which ordinarily is adjusted each year. Thus, the percentages in 

Chart B are comparable within each program, but not across programs.

Both the OASDI and HI annual cost rates rise over the long run from their 

2018 levels (13.77 and 3.44 percent). Projected Social Security cost 

grows to 16.62 percent of taxable payroll in 2040 and to 17.47 percent of 

taxable payroll in 2093. The projected Medicare HI cost rate rises to 

5.00 percent of taxable payroll in 2046, and thereafter increases to 

5.32 percent in 2093.

 Chart B–OASDI and HI Income and Cost as Percentages 

of Their Respective Taxable Payrolls

0%

5%

10%

15%

20%

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

◄ Historical Estimated ►

OASDI Cost

OASDI Income

HI Cost

HI Income

◄ Historical
6

The OASDI and HI income rates in Chart B include payroll taxes and 

taxes on OASDI benefits, but not interest payments. The projected 

OASDI income rate is stable at about 13 percent throughout the longrange period. The HI income rate rises gradually from 3.33 percent in 

2018 to 4.42 percent in 2093 due to the higher payroll tax rates for high 

earners that began in 2013. Individual tax return filers with earnings 

above $200,000, and joint return filers with earnings above $250,000, pay 

an additional 0.9 percent tax on earnings above these earnings thresholds. 

An increasing fraction of all earnings will be subject to the higher tax rate 

over time because the thresholds are not indexed. By 2093, an estimated 

79 percent of workers would pay the higher rate.

How Will Cost Growth in the Different Parts of Medicare Change the 

Sources of Program Financing? As Medicare cost grows over time, 

general revenues and beneficiary premiums will play an increasing role in 

financing the program. Chart C shows scheduled cost and non-interest 

revenue sources under current law for HI and SMI combined as a percentage of GDP. The total cost line is the same as displayed in Chart A and 

shows Medicare cost rising to 6.5 percent of GDP by 2093.

Projected revenue from payroll taxes and taxes on OASDI benefits credited to the HI Trust Fund increases from 1.4 percent of GDP in 2019 to 

1.9 percent in 2093 under current law, while projected general revenue 

transfers to the SMI Trust Fund increase from 1.6 percent of GDP in 2019 

 Chart C–Medicare Cost and Non-Interest Income by Source

as a Percentage of GDP

0%

1%

2%

3%

4%

5%

6%

7%

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Calendar year

◄ Historical Estimated ► Total Cost

Deficit

General

Revenue 

Transfers

State Transfers

& Drug Fees

Premiums

Tax on OASDI 

Benefits

Payroll 

Taxes

◄ Historical
7

to 3.0 percent in 2093, and beneficiary premiums increase from 0.6 to 

1.1 percent of GDP during the same period. Thus, the share of total noninterest Medicare income from taxes declines (from 40 percent to

31 percent) while the general revenue share rises (from 43 percent to 

49 percent), as does the share of premiums (from 15 percent to 

18 percent). The distribution of financing changes in large part because 

costs for Part B and especially Part D—the Medicare components that are 

financed mainly from general revenues—increase at a faster rate than 

Part A cost under the Trustees’ projections. The projected annual HI 

financial deficit beyond 2035 through 2093 averages about 0.4 percent of 

GDP and there is no provision under current law to finance that shortfall 

through general revenue transfers or any other revenue source.

The Medicare Modernization Act of 2003 (MMA) requires that the Board 

of Trustees determine each year whether the annual difference between 

program cost and dedicated revenues (the bottom four layers of Chart C) 

under current law exceeds 45 percent of total Medicare cost in any of the 

first seven fiscal years of the 75-year projection period. The Trustees 

Reports for 2006 through 2013, and in 2017 and 2018, contained a determination of “excess general revenue Medicare funding.” Because the current projected difference is expected to exceed the 45 percent threshold in 

fiscal year 2021, the Trustees are issuing a determination of projected 

excess general revenue Medicare funding in this year’s report. Since this 

determination has been made for two consecutive years, a “Medicare 

funding warning” is triggered, which requires that the President submit to 

Congress proposed legislation to respond to the warning within 15 days 

after the submission of the Fiscal Year 2021 Budget. Congress is then 

required to consider the legislation on an expedited basis.

What Are the Budgetary Implications of Rising Social Security and 

Medicare Costs? Discussion of the long-range financial outlook for 

Medicare and Social Security often focuses on the reserve depletion dates 

for the HI and combined OASDI trust funds—the times when the projected trust fund asset reserves under current law will be insufficient to 

pay the full amounts of scheduled benefits. Normal operations of the trust 

funds also have an impact on the unified Federal budget.

Under the OASDI and HI programs, when taxes and other sources of revenue are collected in excess of immediate program costs, the excess is 

invested in Treasury bonds and held in reserve for future periods. Accumulation of asset reserves in the trust funds improves the unified Federal 

budget position. When trust fund reserves are drawn down to pay scheduled benefits, bonds are redeemed and interest payments are made, creating a current-year cost to the unified Federal budget. 

SMI differs fundamentally from HI and OASDI in regard to the nature of 

its financing and the method by which its financial status is evaluated. 

Unlike HI and OASDI, SMI does not have a trust fund structure with sur-
8

pluses accumulated from prior years. General revenues finance roughly 

75 percent of all SMI costs and pose an immediate cost for the unified 

Federal budget.

Chart D shows the required SMI general revenue funding, plus the excess 

of scheduled costs over dedicated tax and premium income for the 

OASDI and HI trust funds expressed as percentages of GDP through 

2043. For OASDI and HI, the difference between scheduled cost and dedicated revenues is equal to interest earnings and asset redemptions prior to 

trust fund depletion, and unfunded obligations after depletion. The chart 

assumes full benefits will be paid after trust fund depletion, even though 

under current law expenditures can only be made to the extent covered by 

current income. Such budgetary assumptions are typical of unified budget 

baselines, but do not reflect current law in the Social Security Act.

In 2019, the projected difference between Social Security’s expenditures 

and non-interest income is $81 billion. The Trustees anticipate a deficit of 

$13 billion in non-interest income for the HI program.2 The projected 

general revenue demands of SMI are $337 billion. Thus, the total general 

revenue requirements for Social Security and Medicare in 2019 are 

$431 billion, or 2.0 percent of GDP. Redemption of trust fund bonds, 

 Chart D–Projected SMI General Revenue Funding

plus OASDI and HI Tax Shortfalls

[Percentage of GDP]

2 This difference is projected on a cash rather than the incurred expenditures basis applied elsewhere 

in the long-range projections, except where explicitly noted otherwise.

0%

1%

2%

3%

4%

5%

2019 2022 2025 2028 2031 2034 2037 2040 2043

Calendar year

SMI (B&D)

HI

OASDI
9

interest paid on those bonds, and general revenue transfers provide no 

new net income to the Treasury. When the unified budget is not in surplus, 

these payments are made through some combination of increased taxation, reductions in other government spending, or additional borrowing 

from the public.

Each of these trust funds’ operations will contribute increasing amounts 

to Federal unified budget deficits in future years as trust fund bonds are 

redeemed. Until 2026, interest earnings and asset redemptions, financed 

from general revenues, will cover the excess of HI expenditures over tax 

and premium revenues. In addition, general revenues must cover similar 

payments as a result of growing OASDI bond redemption and interest 

payments through 2035 as the trust funds are drawn down.

Without a change in law, the OASI, DI, and HI Trust Funds do not have 

borrowing authority and after depletion of reserves would be unable to 

pay scheduled benefits in full on a timely basis. However, if full benefits 

were to be maintained for both Social Security and Medicare, by 2043 the 

combined OASDI and HI financing gap plus SMI’s projected general revenue demands would equal 4.4 percent of GDP—more than double the

2019 share. 

What Is the Outlook for Short-Term Trust Fund Adequacy? The 

reports measure the short-range adequacy of the OASI, DI, and HI Trust 

Funds by comparing fund asset reserves at the start of a year to projected 

costs for the ensuing year (the “trust fund ratio”). A trust fund ratio of 

100 percent or more—that is, asset reserves at least equal to projected 

cost for the year—is a good indicator of a fund’s short-range adequacy. 

That level of projected reserves for any year suggests that even if cost 

exceeds income, the trust fund reserves, combined with annual tax revenues, would be sufficient to pay full benefits for several years. Chart E 

shows the trust fund ratios through 2055 under the intermediate assumptions.

By this measure, the OASI Trust Fund is financially adequate throughout 

the short-range period (2019-28). The DI Trust Fund fails the short-range 

test because its trust fund ratio was 65 percent at the beginning of 2019 

and is not projected to reach 100 percent within 5 years. 

The HI Trust Fund does not meet the short-range test of financial adequacy; its trust fund ratio was 61 percent at the beginning of 2019 based 

on the year’s anticipated expenditures, and the projected ratio does not 

rise to 100 percent within 5 years. Projected HI Trust Fund asset reserves 

become fully depleted in 2026.
10

The Trustees apply a less stringent annual “contingency reserve” test to 

SMI Part B asset reserves because (i) the financing for that account is set 

each year to meet expected costs, and (ii) the overwhelming portion of the 

financing for that account consists of general revenue transfers and beneficiary premiums, which were 72 percent and 26 percent of total Part B 

income in calendar year 2018. Part D premiums paid by enrollees and the 

required amount of general revenue financing are determined each year. 

Moreover, flexible appropriation authority established by lawmakers for 

Part D allows additional general revenue transfers if costs are higher than 

anticipated, limiting the need for a contingency reserve in that account.

What Are Key Dates in OASI, DI, and HI Financing? The 2019 

reports project that the OASI and HI Trust Funds will be depleted within 

16 years; the anticipated depletion year for the DI Trust Fund is now 

2052. Table 4 shows key dates for the respective trust funds as well as for 

the combined OASDI trust funds.3

The Trustees project that DI Trust Fund reserves will decrease in 2019 

and 2020, and then increase through 2040 before declining annually until 

they are fully depleted in 2052. At that time, program income would be 

sufficient to pay 91 percent of scheduled benefits. 

 Chart E–OASI, DI, and HI Trust Fund Ratios

[Asset reserves as a percentage of annual cost]

3 HI results in this section of the Summary are on a cash rather than the incurred expenditures basis.

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1970 1980 1990 2000 2010 2020 2030 2040 2050

Calendar year

◄ Historical Estimated ►

HI OASI DI

◄ Historical
11

The OASI Trust Fund, when considered separately, has a projected 

reserve depletion date of 2034, unchanged from last year’s report. At that 

time, 77 percent of scheduled OASI benefits would be payable.

The combined OASI and DI Trust Fund reserves now have a projected 

depletion date of 2035, one year later than in last year’s report. After the 

depletion of reserves, continuing tax income would be sufficient to pay 

80 percent of scheduled benefits in 2035, declining to 75 percent in 2093.

The combined OASI and DI Trust Fund reserves are projected to increase 

in 2019 because expected total income ($1,061 billion) slightly exceeds 

anticipated total cost ($1,060 billion). Beginning in 2020, annual total 

OASDI cost exceeds income by increasing amounts throughout the 75-

year projection. Thus, beginning in 2020, net redemptions of trust fund 

asset reserves with General Fund payments will be required to pay scheduled benefits until projected depletion of these reserves in 2035, one year 

later than in last year’s report.

The projected HI Trust Fund depletion date is 2026, the same year as 

reported last year. Under current law, scheduled HI tax and premium 

income would be sufficient to pay 89 percent of estimated HI cost after 

trust fund depletion in 2026, declining to 78 percent by 2043, and then 

gradually increasing to 83 percent again by 2093.

This report projects a decrease in HI Trust Fund asset reserves in 2019 as 

total cost ($330 billion) is expected to exceed total income ($324 billion). 

Projected annual HI cost exceeds program income throughout the longrange projection period and assets will decline continuously until depletion of all reserves in 2026. 

What Is the Long-Range Actuarial Balance of the OASI, DI, and HI 

Trust Funds? Another way to view the outlook for payroll tax-financed 

trust funds (OASI, DI, and HI) is to consider their actuarial balances for 

the 75-year valuation period. The actuarial balance measure includes the 

trust fund asset reserves at the beginning of the period, an ending fund 

balance equal to the 76th year’s costs, and projected costs and income 

during the valuation period, all expressed as a percentage of taxable payroll for the 75-year projection period. Actuarial balance is not an informative concept for the SMI program because Federal law sets premium 

Table 4: KEY DATES FOR THE TRUST FUNDS 

OASI DI OASDI HI

First year cost exceeds income 

excluding interesta. . . . . . . . . . . . . . . . . . . 

a Dates indicate the first year a condition is projected to occur and to persist annually thereafter through 

2093.

2010 2036 2010 2008

First year cost exceeds total incomea . . . . 2020 2041 2020 2018

Year trust fund reserves are depleted . . . . 2034 2052 2035 2026
12

increases and general revenue transfers at the levels necessary to bring 

SMI into annual balance.

The actuarial deficit represents the average amount of change in income 

or cost that is needed throughout the valuation period in order to achieve 

actuarial balance. The actuarial balance equals zero if cost for the period 

can be met for the period as a whole and trust fund asset reserves at the 

end of the period are equal to the following year’s cost. The OASI, DI, 

and HI Trust Funds all have long-range actuarial deficits under the intermediate assumptions, as shown in the following table.

Note: Totals do not necessarily equal the sums of rounded components.

The annual deficit, expressed as the difference between the cost rate and 

income rate for a particular year, for the combined OASI and DI Trust 

Funds was 1.10 percent of taxable payroll in 2018. The Trustees project 

that the annual deficits for Social Security will be smaller throughout the 

75-year valuation period than reported last year. Annual deficits for 

2019-93 average 0.18 percentage point lower than in last year’s report. 

Projected annual deficits gradually increase from 1.06 percent of taxable 

payroll in 2019 to 3.34 percent in 2040. The deficits then decline gradually to 3.09 percent in 2051 before resuming a generally upward trajectory and reaching 4.11 percent of taxable payroll in 2093 (Chart B). The 

relatively large variation in annual deficits indicates that a single tax rate 

increase for all years starting in 2019 sufficient to achieve actuarial balance would result in sizable annual surpluses early in the period followed 

by increasing deficits in later years. Sustainable solvency would require 

payroll tax rate increases or benefit reductions (or a combination thereof) 

by the end of the period that are substantially larger than those needed on 

average for this report’s long-range period (2019-93).

In 2018, the HI annual deficit was 0.11 percent of taxable payroll, continuing its downward trend since 2010, but is expected to rise to 

0.12 percent in 2019. Projected annual deficits then gradually increase to 

1.13 percent of taxable payroll by 2046, before generally declining to 

0.91 in 2093. The HI cost rate has mostly been declining since 2010 

mainly due to (i) expenditure growth that was constrained in part by low 

utilization and low payment updates and (ii) a rebound of taxable payroll 

growth from 2007-09 recession levels. Starting in 2019, the cost rate is 

expected to rise primarily due to the continued retirements of those in the 

baby boom generation and partly due to an expected return to modest 

health services cost growth. This cost-rate increase is moderated by the 

Table 5: LONG-RANGE ACTUARIAL DEFICIT OF THE 

OASI, DI, AND HI TRUST FUNDS

[Percent of taxable payroll]

OASI DI OASDI HI

Actuarial

Deficit . . . . . . . . . . . . . . . . . . 2.67 0.12 2.78 0.91
13

accumulating effect of the productivity adjustments to provider price 

updates, which are estimated to reduce annual HI per capita cost growth 

by an average of 0.8 percent through 2028 and 1.0 percent thereafter. 

After 25, 50, and 75 years, for example, the prices paid to HI providers 

under current law would be 20 percent, 38 percent, and 52 percent lower, 

respectively, than prices absent the productivity reductions.

The financial outlooks for both OASDI and HI depend on a number of 

demographic and economic assumptions. Nevertheless, the actuarial deficit in each of these programs is large enough that averting trust fund 

depletion under current-law financing is extremely unlikely. An analysis 

that allows plausible random variations around the intermediate assumptions employed in the report indicates that OASDI trust fund depletion is 

highly probable by mid-century.

How Has the Financial Outlook for Social Security and Medicare 

Changed Since Last Year? Under the intermediate assumptions, the 

combined OASDI trust funds have a projected 75-year actuarial deficit 

equal to 2.78 percent of taxable payroll, compared with the 2.84 percent 

figure reported last year. The projected depletion date for the combined 

asset reserves is 2035, one year later than in last year’s report. Advancing 

the valuation date by one year to include 2093, a year with a large negative balance, alone would have increased the actuarial deficit by 

0.05 percent of taxable payroll. That effect was more than fully offset by 

changes in law, assumptions, and methods that collectively decreased the 

actuarial deficit by 0.11 percent of taxable payroll. 

The long-range actuarial deficit for the DI Trust Fund is now 0.12 percent 

of taxable payroll, down from 0.21 percent projected in last year’s report. 

Since 2010, disability applications have been declining and the number of 

disabled-worker beneficiaries has been falling since 2014. In light of this 

experience, and in consideration of long-term averages, in this report the 

Trustees have lowered the ultimate age-sex-adjusted disability incidence 

rate assumption from 5.4 to 5.2 per thousand exposed. 

Medicare’s HI Trust Fund has a long-range actuarial deficit equal to 

0.91 percent of taxable payroll under the intermediate assumptions, 

0.09 percentage point larger than reported last year. The anticipated date 

of depletion of the HI Trust Fund remains 2026. HI income is projected to 

be lower than last year’s estimates due to lower payroll tax revenue and 

reduced income from the taxation of Social Security benefits. In addition, 

HI expenditures are expected to be slightly higher than last year’s estimates throughout the short-range period because of higher-than-projected 

2018 spending and higher projected provider payment updates. 

Due to the nature of the financing for both parts of SMI, each account is 

separately in financial balance under current law, as they were last year. 

Projected Part B costs are higher than those in last year’s report due to 
14

faster expected spending growth for physician-administered drugs and 

lower economy-wide productivity assumptions. In contrast, anticipated 

Part D spending is lower than in last year’s report because of higher 

rebates and slower overall drug price increases. SMI spending was 

2.1 percent of GDP in 2018, and is now expected to increase to 

4.2 percent of GDP in 2092. In last year’s report, SMI spending was estimated to be 3.9 percent of GDP in 2092.

How Are Social Security and Medicare Financed? For OASDI and HI, 

the major source of financing is payroll taxes on earnings paid by employees and their employers. Self-employed workers pay the equivalent of the 

combined employer and employee tax rates. During 2018, an estimated 

176.0 million people had earnings covered by Social Security and paid 

payroll taxes; for Medicare the corresponding figure was 180.0 million. 

Current law establishes payroll tax rates for OASDI, which apply to earnings up to an annual maximum ($132,900 in 2019) that ordinarily

increases with the growth in the nationwide average wage. In contrast to 

OASDI, covered workers pay HI taxes on total earnings. The scheduled 

payroll tax rates (in percent) for 2019 are: 

There is an additional HI tax equal to 0.9 percent of earnings over 

$200,000 for individual tax return filers, and on earnings over $250,000 

for joint return filers.

Taxation of Social Security benefits is another source of income for the 

Social Security and Medicare trust funds. Beneficiaries with incomes 

above $25,000 for individuals (or $32,000 for married couples filing 

jointly) pay income taxes on up to 50 percent of their benefits, with the 

revenues going to the OASDI trust funds. This income from taxation of 

benefits made up about 3 percent of Social Security’s income in 2018. 

Those with incomes above $34,000 (or $44,000 for married couples filing 

jointly) pay income taxes on up to 85 percent of benefits, with the 

additional revenues going to the Medicare trust fund. This income from 

taxation of benefits made up about 8 percent of HI Trust Fund income in 

2018.

The trust funds also receive income from interest on their accumulated 

reserves, which are invested in U.S. Government securities. In 2018, 

interest income made up 8 percent of total income to the OASDI trust 

funds, 2 percent for HI, and less than 1 percent for SMI.

Table 6: 2019 PAYROLL TAX RATES

[In percent]

OASI DI OASDI HI Total

Employees . . . . . . 5.30 0.90 6.20 1.45 7.65

Employers . . . . . . 5.30 0.90 6.20 1.45 7.65

Combined total. . . 10.60 1.80 12.40 2.90 15.30
15

Payments from the General Fund financed about 74 percent of SMI 

Part B and Part D costs in 2018, with most of the remaining costs covered 

by monthly premiums charged to enrollees or in the case of low-income 

beneficiaries, paid on their behalf by Medicaid for Part B and Medicare 

for Part D. Part B and Part D premium amounts are determined by methods defined in law and increase as the estimated costs of those programs 

rise. 

In 2019, the Part B standard monthly premium is $135.50. There are also 

income-related premium surcharges for Part B beneficiaries whose modified adjusted gross income exceeds a specified threshold. In 2019, the 

threshold is $85,000 for individual tax return filers and $170,000 for joint 

return filers. Income-related premiums range from $189.60 to $460.50 per 

month in 2019.

In 2019, the Part D “base monthly premium” is $33.19. Actual premium 

amounts charged to Part D beneficiaries depend on the specific plan they 

have selected and average around $32 for standard coverage. Part D 

enrollees with incomes exceeding the thresholds established for Part B 

must pay income-related monthly adjustment amounts in addition to their 

normal plan premium. For 2019, the adjustments range from $12.40 to 

$77.40 per month. Part D also receives payments from States that partially compensate for the Federal assumption of Medicaid responsibilities 

for prescription drug costs for individuals eligible for both Medicare and 

Medicaid. In 2019, State payments cover about 12 percent of Part D costs.

Who Are the Trustees? There are six Trustees, four of whom serve by 

virtue of their positions in the Federal Government: the Secretary of the 

Treasury, the Secretary of Labor, the Secretary of Health and Human Services, and the Commissioner of Social Security. The other two Trustees 

are public representatives appointed by the President, subject to confirmation by the Senate. The two Public Trustee positions have been vacant 

since July 2015.
Because the two Public Trustee positions are currently vacant, there is no 

Message from the Public Trustees for inclusion in the Summary of the 

2019 Annual Reports.


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2019