Status of the 

Social Security 

and Medicare 

Programs

A SUMMARY OF THE

2020 ANNUAL REPORTS

Social Security and Medicare

Boards of Trustees

2020
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/2020/

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

The reports include extensive information about these important social 

insurance programs and careful analysis of their outlook. We believe they 

fully and fairly present the current and projected financial condition of 

their respective programs, subject to the following caveat.

The projections and analysis in these reports do not reflect the potential 

effects of the COVID-19 pandemic on the Social Security and Medicare 

programs. Given the uncertainty associated with these impacts, the 

Trustees believe that it is not possible to adjust their estimates accurately 

at this time.

Social Security and Medicare both face long-term financing shortfalls 

under currently scheduled benefits and financing. Both programs will 

experience cost growth substantially in excess GDP growth during 

through the mid-2030s due to rapid population aging. Medicare also sees 

its share of GDP grow through the late 2070s due to increases in the volume and intensity of services provided. Based on our best estimates, the 

reports show:

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

pays retirement and survivors benefits, will be able to pay scheduled 

benefits on a timely basis until 2034, the same as reported last year. 

At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 76 percent of scheduled benefits. 

• The Disability Insurance (DI) Trust Fund, which pays disability benefits, will be able to pay scheduled benefits until 2065, 13 years later 

than in last year’s report. At that time, the fund’s reserves will 

become depleted and continuing tax income will be sufficient to pay 

92 percent of scheduled benefits.

• The OASI and DI funds are separate entities under law. The report 

also presents information that combines the reserves of these two 

funds in order to illustrate the actuarial status of the Social Security 

program as a whole. The hypothetical combined OASDI funds 

would be able to pay scheduled benefits on a timely basis until 2035, 

the same as reported last year. At that time, the combined funds’ 

reserves will become depleted and continuing tax income will be 

sufficient to pay 79 percent of scheduled benefits. 
• The Hospital Insurance (HI) Trust Fund, which pays Medicare Part 

A inpatient hospital expenses, will be able to pay scheduled benefits 

until 2026, the same as reported last year. At that time, the fund’s 

reserves will become depleted and continuing total program income 

will be sufficient to pay 90 percent of total scheduled benefits.

• The Supplemental Medical Insurance (SMI) Trust Fund has two 

accounts: Part B, which pays for physician and outpatient services, 

and Part D, which covers prescription drug benefits. SMI is 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. Due to these funding provisions, the rapid growth of SMI costs will place steadily 

increasing demands on both taxpayers and beneficiaries. 

• The Trustees are issuing a determination of projected excess general 

revenue Medicare funding for the fourth consecutive year. This 

determination is given when the difference between Medicare’s total 

outlays and its dedicated funding sources is projected to exceed 

45 percent of outlays within 7 years. This year’s determination triggers an issuance of a Medicare funding warning for the third consecutive year.

One can view the financial operations of Medicare and Social Security in 

the context of the programs’ trust funds or in the context of the overall 

Federal government’s unified budget. In the latter context, Social Security 

and Medicare together accounted for 41 percent of total federal expenditures in fiscal year 2019. The unified budget includes current trust fund 

operations. Consequently, any drawdown of trust fund balances, as well 

as general fund transfers into Medicare’s SMI fund, increases financial 

pressure on the unified budget. 

Key Changes Since Last Year

The 75-year (2020-2094) actuarial deficit of the combined OASI and DI 

trust funds increased from 2.78 to 3.21 percent of taxable payroll since 

the 2019 reports.1 As shown in Table 1, this result was due to the com1 The 75-year actuarial balance is a summary measure that calculates the difference between the projected summarized income rate and the summarized cost rate of the trust funds as a percentage of taxable payroll. When that balance is negative, or in “deficit,” projected income over the long-range 

valuation period (2020-2094) plus any trust fund reserves at the start of the period are insufficient to 

pay all program costs over the period and leave an adequate “contingency reserve” at the end of the 

period.
bined effects of changes in methodology, legislation, regulation, economic, demographic, and programmatic assumptions, and recent 

observed experience. The following changes had the largest effects.

• The excise tax on high-cost, employer-sponsored group health plans 

(commonly referred to as the Cadillac tax) was repealed.

• The following long-range ultimate assumptions were changed:

 The total fertility rate was reduced from 2.0 to 1.95 births per 

woman.

 Consumer price inflation was reduced from 2.6 to 2.4 percent.

 The real interest rate was reduced from 2.5 to 2.3 percent.

 The disability incidence rate was reduced from 5.2 to 5.0 per 

1000 covered workers.

• The 75-year valuation period was changed from 2019-2093 to 

2020-2094.

Note: Totals do not necessarily equal the sums of components due to rounding.

The 75-year (2020-2094) actuarial deficit of the HI Trust Fund decreased 

from 0.91 to 0.76 percent of taxable payroll. As shown in Table 2, this 

result was due to the combined effects of changes in methodology, legislation, and economic, demographic, and programmatic assumptions, 

including the changes discussed above for OASDI. The principal changes 

exclusively affecting Medicare are:

Table 1.—Change in the OASDI 75-Year Actuarial Balance Since the 2019 Report,

Based on Intermediate Assumptions

[As a percentage of taxable payroll]

Item OASI DI OASDI

Shown in the 2019 report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2.67 -.12 -2.78

Changes in actuarial balance due to changes in:

Legislation / Regulation. . . . . . . . . . . . . . . . . . . . . . . -.12 .00 -.12

Valuation period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -.05 -.01 -.05

Demographic data and assumptions. . . . . . . . . . . . . . -.12 .00 -.13

Economic data and assumptions . . . . . . . . . . . . . . . . -.16 -.02 -.18

Disability data and assumptions. . . . . . . . . . . . . . . . . -.01 .06 .05

Methods and programmatic data . . . . . . . . . . . . . . . . -.02 .02 .00

Total change in actuarial balance. . . . . . . . . . . . . . . . . . -.47 .05 -.43

Shown in the 2020 report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3.14 -.07 -3.21
• Lower projected spending due to a methodological change in the 

projection of health care spending that considers time until death.2

• Higher projected enrollment and spending per beneficiary in Medicare Advantage.

• Higher projected spending outside the prospective payment system 

for acute care hospitals.

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.

2 In previous reports, beneficiaries’ projected health spending had a demographic adjustment that took 

into account the effect of their age and sex on their health spending. Research has found that Medicare 

spending is higher for persons closer to death, regardless of their age. In this report, the demographic 

adjustment was modified to take into account the combined effects of age, sex, and time until death on 

health spending. For more information, see https://www.cms.gov/files/document/incorporation-timedeath-medicare-demographic-assumptions.pdf.

Table 2.—Change in the HI 75-Year Actuarial Balance Since the 2019 Report,

Based on Intermediate Assumptions

[As a percentage of taxable payroll]

Shown in the 2019 report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -0.91

Changes in actuarial balance due to changes in:

Valuation period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -.01

Base estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .07

Private health plan assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -.12

Hospital assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -.06

Other provider assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .00

Methodological changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Legislation changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -.10

Other economic and demographic assumptions . . . . . . . . . . . . . . . . . . -.05

Total change in actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Shown in the 2020 report:

Actuarial balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -.76
By the Trustees:

STEVEN T. MNUCHIN, Secretary of the Treasury,

and Managing Trustee 

of the Trust Funds.

EUGENE SCALIA, Secretary of Labor,

and Trustee.

ALEX M. AZAR II

Secretary of Health and Human Services,

and Trustee.

ANDREW SAUL, Commissioner of Social Security,

and Trustee.
1

A SUMMARY OF THE 2020 ANNUAL SOCIAL SECURITY

AND MEDICARE TRUST FUND REPORTS

In 2019, Social Security’s reserves were $2.9 trillion at the year’s end, 

having increased by $2 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 

now projected to be able to pay full benefits until 2065, 13 years later than 

indicated in last year’s Social Security report. Disabled-worker applications have declined substantially since 2010 and the number of disabledworker beneficiaries in current payment status has been falling since 

2014. Accordingly, the Trustees have again reduced the long-range disability incidence rate assumption in this report. 

The projected reserve depletion date for the combined OASI and DI funds 

is 2035, the same as in last year’s report.1 Over the 75-year projection 

period, Social Security faces an actuarial deficit of 3.21 percent of taxable 

payroll, increased from the 2.78 percent figure projected last year. The 

main causes are (1) the repeal of the excise tax on employer-sponsored 

group health insurance premiums above a specified level (commonly 

referred to as the “Cadillac tax”), which slows the projected growth in 

real covered earnings and results in less payroll tax income, and (2) 

changes in assumptions including lower anticipated fertility rates, consumer inflation, and interest rates. The actuarial deficit equals 1.1 percent 

of gross domestic product (GDP) through 2094.

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

$6 billion to a total of $195 billion at the end of 2019. 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 tax revenue associated with the repeal of the health insurance excise tax. HI expenditures 

are expected to be lower than last year’s estimates because of lower-thanprojected 2019 spending, lower projected provider payment updates, and 

the incorporation of time-to-death into the demographic factors used in 

the projection model. Beneficiaries closer to death tend to have higher 

health spending, regardless of age, and the demographic factors now 

explicitly take that pattern into account. For the 75-year projection period, 

the HI actuarial deficit has decreased to 0.76 percent of payroll from 

0.91 percent in last year’s report, and is equivalent to 0.3 percent of GDP 

through 2094. 

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

The Supplementary Medical Insurance (SMI) Trust Fund held $109 billion in assets at the end of 2019. Parts B and D are expected to be adequately financed over the next 10 years and beyond because income from 

premiums and general revenue are reset each year to cover expected costs 

and ensure an adequate reserve for Part B contingencies. 

The projections and analysis in this year’s reports do not reflect the potential effects of the COVID-19 pandemic on the Social Security and Medicare programs. Given the uncertainty associated with these impacts, the 

Trustees believe that it is not possible to adjust their estimates accurately 

at this time.

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 Part A 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 2019? In 2019, 54.1 million 

people received OASI benefits, 9.9 million received DI benefits, and 

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

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

reserves increased in 2019; DI and HI Trust Fund reserves declined.

Table 1: TRUST FUND OPERATIONS, 2019

[In billions]

OASI DI HI SMI

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

Income during 2019 . . . . . . . . . . 917.9 143.9 322.5 472.3

Cost during 2019. . . . . . . . . . . . . 911.4 147.9 328.3 467.9

Net change in reserves . . . . . . 6.5 -4.0 -5.8 4.4

Reserves (end of 2019) . . . . . . . . 2,804.3 93.1 194.6 108.8

Note: Totals do not necessarily equal the sums of rounded components.
3

Table 2 shows payments, by category, from each trust fund in 2019.

Trust fund income, by source, in 2019 is shown in Table 3.

In 2019, Social Security’s total income exceeded total cost by $2 billion, 

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

program income, there was a deficit of $78 billion. The Trustees project 

that total cost will exceed total income (including interest) beginning in 

2021 and thereafter. 

In 2019, the HI Trust Fund’s total income ($322 billion), including 

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

($328 billion). The Trustees project deficits in all years, with reserves 

depleting 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 GDP, the most frequently used measure of the total output of the U.S. economy (Chart A).

Table 2: PROGRAM COST, 2019

[In billions]

Category OASI DI HI SMI

Benefit payments . . . . . . . . . . . . $902.8 $145.1 $322.8 $462.8

Railroad Retirement financial 

interchange . . . . . . . . . . . . . . . 4.9 0.1 — —

Administrative expenses . . . . . . 3.7 2.7 5.5 5.1

Total . . . . . . . . . . . . . . . . . . . . . . 911.4 147.9 328.3 467.9

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

Table 3: PROGRAM INCOME, 2019

[In billions]

Source OASI DI HI SMI

Payroll taxes . . . . . . . . . . . . . . . $805.1 $139.4 $285.1 —

Taxes on OASDI benefits . . . . . 34.9 1.6 23.8 —

Interest earnings . . . . . . . . . . . . 77.9 2.9 6.5 $2.6

General Fund reimbursements . a a 1.3 -8.1

General revenues. . . . . . . . . . . . — — — 346.5

Beneficiary premiums . . . . . . . . — — 3.9 115.2

Transfers from States. . . . . . . . . — — — 12.3

Other . . . . . . . . . . . . . . . . . . . . . a — 1.8 3.8

Total. . . . . . . . . . . . . . . . . . . . . . 917.9 143.9 322.5 472.3 a Less than $50 million.

Note: Totals do not necessarily equal the sums of rounded components. 
4

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 5.0 percent in 2020 to about 5.9 percent by 2038, then 

decline to 5.8 percent by 2053 before generally rising to 5.9 percent of 

GDP by 2094. Under the intermediate assumptions, Medicare cost rises 

from 3.9 percent of GDP in 2020 to 6.0 percent of GDP by 2044 due 

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

increases further to 6.5 percent by 2094. The growth in health care cost 

per beneficiary becomes the larger factor later in the valuation period, 

particularly in Part D.

In 2020, the combined cost of the Social Security and Medicare programs 

is estimated to equal 8.8 percent of GDP. The Trustees project an increase 

to 11.6 percent of GDP by 2035 and to 12.3 percent by 2094, with most of 

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

expected to rise gradually from 77 percent of the cost of Social Security 

in 2020 to become the more costly program by 2040. During the last 

25 years of the long-range period, Medicare is, on average, about 

9 percent more costly than Social Security.

 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

Ż Historical Estimated Ź

HI + SMI

OASI + DI

Ż Historical
5

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 Medicare costs assume realization of the full estimated savings 

specified by current law. As described in the Medicare Trustees Report, 

the projections for HI and 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).

 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

Ż Historical Estimated Ź

OASDI Cost

OASDI Income

HI Cost

HI Income

Ż Historical
6

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

payrolls. HI taxable payroll is about 26 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 ($137,700 in 

2020), 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 

2019 levels (13.86 and 3.42 percent). Projected Social Security cost 

grows to 16.86 percent of taxable payroll in 2042 and to 17.94 percent of 

taxable payroll in 2094. The projected Medicare HI cost rate rises to 

4.96 percent of taxable payroll in 2047, and thereafter remains at about 

that level to 2094.

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 3.34 percent in 

2019 to 4.41 percent in 2094 primarily 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 

2094, an estimated 80 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 2094.

Projected revenue from payroll taxes and taxes on OASDI benefits credited to the HI Trust Fund increases from 1.5 percent of GDP in 2020 to 

1.8 percent in 2094 under current law, while projected general revenue 

transfers to the SMI Trust Fund increase from 1.7 percent of GDP in 2020 

to 3.1 percent in 2094, and beneficiary premiums increase from 0.6 to 

1.2 percent of GDP during the same period. Thus, the share of total noninterest Medicare income from taxes declines (from 38 percent to 

28 percent) while the general revenue share rises (from 44 percent to 

50 percent), as does the share of premiums (from 16 percent to 

19 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 
7

financial deficits beyond 2035 are 0.4 to 0.5 percent of GDP during 

2036-60 and then gradually decline to 0.2 percent of GDP by 2094. There 

is no provision under current law to finance that shortfall through general 

revenue transfers or any other revenue source.

The law 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 through 2019, 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, which is the fourth consecutive year with 

that determination. Because this determination has been made for at least 

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 2022 Budget. Congress is then required to consider the legislation on 

an expedited basis.

 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

Ż Historical Estimated Ź Total Cost

Deficit

General

Revenue 

Transfers

State Transfers

& Drug Fees

Premiums

Tax on OASDI 

Benefits

Payroll 

Taxes

Ż Historical
8

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 reserves in the trust funds improves the unified Federal budget position. When trust fund reserves are drawn down to pay scheduled 

benefits and expenses, 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 surpluses accumulated from prior years. General revenues finance roughly 

75 percent of all SMI costs each year 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 

2044. 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 2020, the projected difference between Social Security’s expenditures 

and non-interest income is $73 billion. The Trustees anticipate a deficit of 

$15 billion in non-interest income for the HI program.2 The projected 

general revenue demands of SMI are $377 billion. Thus, the total general 

revenue requirements for Social Security and Medicare in 2020 are 

$465 billion, or 2.1 percent of GDP. Redemption of trust fund bonds, 

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.

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.
9

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 2044 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 

2020 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—or reaching 100 percent within 5 years is a good indicator of a fund’s short-range adequacy. That level of projected reserves for 

 Chart D–Projected SMI General Revenue Funding

plus OASDI and HI Tax Shortfalls

[Percentage of GDP]

0%

1%

2%

3%

4%

5%

2020 2023 2026 2029 2032 2035 2038 2041 2044

Calendar year

SMI (B&D)

HI

OASDI
10

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 

2066 under the intermediate assumptions.

By this measure, neither the OASI Trust Fund nor the DI Trust Fund is 

financially adequate throughout the short-range period (2020-29). The 

OASI Trust Fund fails the short-range test because its trust fund ratio is 

projected to decline from 291 percent at the beginning of 2020 to 

94 percent at the beginning of 2030. The DI Trust Fund ratio was 

62 percent at the beginning of 2020 and is not projected to attain 

100 percent within 5 years. 

The HI Trust Fund also does not meet the short-range test of financial 

adequacy; its trust fund ratio was 55 percent at the beginning of 2020 

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.

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

SMI Part B asset reserves because (1) the financing for that account is set 

each year to meet expected costs, and (2) the overwhelming portion of the 

financing for that account consists of general revenue transfers and bene-

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

[Asset reserves as a percentage of annual cost]

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060

Calendar year

Ż Historical Estimated Ź

OASI DI HI

Ż Historical
11

ficiary premiums, which were 72 percent and 27 percent of total Part B 

income in calendar year 2019. 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 2020 

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

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

2065. 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 increase through 

2046 before declining annually until they are fully depleted in 2065. At 

that time, program income would be sufficient to pay 92 percent of scheduled benefits, and 90 percent by 2094.

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

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

time, 76 percent of scheduled OASI benefits would be payable, declining 

to 71 percent in 2094.

The combined OASI and DI Trust Fund reserves have a projected depletion date of 2035, the same as in last year’s report. After the depletion of 

reserves, continuing tax income would be sufficient to pay 79 percent of 

scheduled benefits in 2035, and 73 percent by 2094.

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

in 2020 because expected total income ($1,116 billion) exceeds anticipated total cost ($1,112 billion). Beginning in 2021, annual total OASDI 

cost exceeds income by increasing amounts throughout the 75-year projection. Thus, starting in 2021, 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, the same as in 

last year’s report.

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

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 

2094.

2010 2041 2010 2008

First year cost exceeds total incomea . . . . 2021 2047 2021 2018

Year trust fund reserves are depleted . . . . 2034 2065 2035 2026
12

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 90 percent of estimated HI cost after 

trust fund depletion in 2026, declining to 78 percent by 2044, and then 

gradually increasing to 90 percent by 2094.

This report projects a decrease in HI Trust Fund asset reserves in 2020 as 

total cost ($351 billion) is expected to exceed total income ($342 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 

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.

For the combined OASI and DI Trust Funds, the annual deficit, expressed 

as the difference between the cost rate and income rate for a particular 

year, was 1.03 percent of taxable payroll in 2019. Compared with last 

year’s report, the Trustees project larger annual deficits for Social Security in all years beginning in 2022, principally due to (1) the recent repeal 

of the excise tax on high-cost employer sponsored health insurance premiums, which results in slower projected growth in average real covered 

earnings and payroll tax income, and (2) assumed lower fertility rates and 

Table 5: LONG-RANGE ACTUARIAL DEFICIT OF THE 

OASI, DI, AND HI TRUST FUNDS

[Percent of taxable payroll]

OASI DI OASDI HI

Actuarial

Deficit . . . . . . . . . . . . . . . . . . 3.14 0.07 3.21 0.76
13

consumer inflation. Lower interest rates have negligible effects on annual 

deficits. Annual deficits for 2020-94 average 0.37 percentage point higher 

than in last year’s report. The differences in projected annual deficits 

between last year’s report and this year’s are small in the 2020s and generally grow until the 2080s. For 2093, the projected annual deficit is 4.48 

percent of payroll in this year’s report, compared to 4.11 percent in last 

year’s report.

Projected annual deficits for the combined OASI and DI programs gradually increase from 0.92 percent of taxable payroll in 2020 to 3.54 percent 

in 2042. The deficits then decline gradually to 3.46 percent in 2049 before 

resuming a generally upward trajectory and reaching 4.51 percent of taxable payroll in 2094 (Chart B). The relatively large variation in annual 

deficits indicates that a single tax rate increase for all years starting in 

2020 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 longrange period (2020-94).

In 2019, the HI annual deficit was 0.08 percent of taxable payroll, continuing its downward trend since 2010, but is expected to rise to 

0.16 percent in 2020. Projected annual deficits then increase gradually to 

1.08 percent of taxable payroll by 2045, before generally declining to 

0.50 percent in 2094. The HI cost rate has generally declined since 2010 

as the economy has recovered from the 2007-09 recession, while health 

care cost growth rates have been low. Starting in 2020, the Trustees 

expect annual HI deficits to increase as cost rates grow faster than income 

rates. The cost rate is expected to increase primarily due to rising per beneficiary spending and the aging of the baby boom population. Throughout 

the long-range period, cost rate growth is constrained by the productivity 

reductions in provider payments, and income rates continue to increase as 

a larger share of earnings becomes subject to the additional 0.9 percent 

payroll tax and a larger share of Social Security benefits becomes subject 

to income tax that is credited to the HI Trust Fund. 

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 before 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 
14

equal to 3.21 percent of taxable payroll, compared with the 2.78 percent 

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

asset reserves is 2035, the same as in last year’s report. Advancing the 

valuation period by one year to include 2094, a year with a large negative 

balance, alone increased the actuarial deficit by 0.05 percent of taxable 

payroll. Changes in law (repeal of the excise tax on high-cost employer 

provided health insurance plans), methods, starting values, and assumptions (in particular, lower anticipated fertility rates, consumer inflation, 

and interest rates) combined to increase the actuarial deficit by an additional 0.38 percent of taxable payroll. 

The long-range actuarial deficit for the DI Trust Fund is now 0.07 percent 

of taxable payroll, down from 0.12 percent projected in last year’s report. 

Since 2010, disability applications have declined substantially 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 5.2 to 5.0 per thousand exposed 

workers. 

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

0.76 percent of taxable payroll under the intermediate assumptions, 

0.15 percentage point lower 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. In 

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

2019 spending, lower projected provider payment updates, and the incorporation of time-to-death into the demographic factors used in the projections model.

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 somewhat higher than those in last year’s report 

due to higher spending for Part B drugs and higher spending for Medicare 

Advantage beneficiaries. In contrast, projected Part D spending is lower 

than in last year’s report because of slower overall drug price increases 

and higher direct and indirect remuneration (payments primarily consisting of rebates negotiated by Part D plans). SMI spending was 2.2 percent 

of GDP in 2019, and is now expected to increase to 4.4 percent of GDP in 

2093. In last year’s report, SMI spending was estimated to be 4.2 percent 

of GDP in 2093.

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 2019, an estimated 

177.9 million people had earnings covered by Social Security and paid 
15

payroll taxes; for Medicare the corresponding figure was 181.9 million. 

Current law establishes payroll tax rates for OASDI, which apply to earnings up to an annual maximum ($137,700 in 2020) 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 2020 are shown in Table 6. 

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 2019. 

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 7 percent of HI Trust Fund income in 

2019.

The trust funds also receive income from interest on their accumulated 

reserves, which are invested in U.S. Government securities. In 2019, 

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.

Payments from the General Fund financed about 72 percent of SMI 

Part B and Part D costs in 2019, 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 2020, the Part B standard monthly premium is $144.60. There are also 

income-related premium surcharges for Part B beneficiaries whose modified adjusted gross income exceeds a specified threshold. In 2020, the 

threshold is $87,000 for individual tax return filers and $174,000 for joint 

Table 6: 2020 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
16

return filers. Income-related premiums range from $57.80 to $347.00 per 

month in 2020.

In 2020, the Part D “base monthly premium” is $32.74. Actual premium 

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

have selected and average around $30 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 2020, the adjustments range from $12.20 to 

$76.40 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 2020, 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 

2020 Annual Reports.
.
.

2020