Medicare

Medicare Part A Funds to Run Out in 2026

The trust fund for Medicare Part A did not significantly change from last year, though its financial position still remains precarious.

The trust fund for Medicare Part A will be able to pay full benefits until 2026 before reserves will be depleted.

That’s the same year as predicted in 2020, according to a summary of the trustees 2021 report, which was released on Tuesday. If the reserves run out for the Hospital Insurance Trust Fund, then the program’s income should be able to cover 91% of scheduled benefits. Medicare Part A covers hospital care for enrollees.

Reserves for the Hospital Insurance Trust Fund fell by $60 billion, to $134 billion, at the end of 2020. This drop was related to the expansion of the Medicare Accelerated and Advance Payments Program because of COVID-19. This program is meant to provide funding to Part A providers and Part B suppliers when there are disruptions to submitting and processing claims. These payments should be repaid this year and 2022.

“The financial status of the [Hospital Insurance] Trust Fund has not appreciably changed and the Trustees project that it will be able to pay full benefits until 2026, unchanged from last year’s Medicare report,” according to the summary. “[Hospital Insurance] Trust income is projected to be lower than last year’s estimates due to lower payroll tax revenues while [Hospital Insurance] Trust expenditures are also expected to be lower because of smaller projected provider payment updates and improvements in the projection methodology.”

The Supplemental Medical Insurance Trust Fund, which has one account for Part B (doctor’s appointments and outpatient care coverage) and another for Part D (prescription drug coverage), is “adequately financed into the indefinite future because current law provides financing from general revenues” and premiums to cover the anticipated expenses, the summary says. However, a significant uptick in costs “will place steadily increasing demands on both taxpayers and beneficiaries,” according to the summary. This trust fund had $143 billion in assets at the end of last year with Parts B and D being funded for at least the next decade.

Overall, there were 62.6 million Medicare beneficiaries in 2020.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
7 Best Commodity Stocks to Play the Coming Boom
commodities

7 Best Commodity Stocks to Play the Coming Boom

These seven commodity stocks are poised to take advantage of a unique confluence of events. Just mind the volatility.
September 8, 2021
Stock Market Holidays in 2021
Markets

Stock Market Holidays in 2021

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2021.
September 2, 2021

Recommended

What Is the Social Security COLA?
retirement

What Is the Social Security COLA?

This year especially, cost-of-living adjustments are late to the party, as consumers are feeling the effect of price spikes now.
September 16, 2021
Retirees Likely to Receive Significant Bump in Social Security Benefits in 2022
social security

Retirees Likely to Receive Significant Bump in Social Security Benefits in 2022

The cost-of-living adjustment for Social Security benefits for next year is expected to be the largest since 1982.
September 16, 2021
The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement
required minimum distributions (RMDs)

The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement

If you don't need the money to live on, wait until December to take your RMD and ask the sponsor to withhold a big chunk for the IRS.
September 14, 2021
When Retirees Need to File an Amended Tax Return
tax returns

When Retirees Need to File an Amended Tax Return

Realizing that you made a mistake after filing your tax return can be panic-inducing for retirees (or anyone else). But don't stress. You may not need…
September 13, 2021