CED Newsletters & Policy Alerts

Social Security and Medicare Boards of Trustees Release Annual Trust Fund Report

June 25, 2025

Action: 2025 Annual Reports of the Boards of Trustees for the Social Security and Medicare Trust Funds

What it does: Last week, the Trustees of the Social Security and Medicare Trust Funds released their reports on the current and projected financial status of the two programs. Under the intermediate (best estimate) assumptions, Social Security’s Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of total scheduled benefits until 2033, unchanged from last year’s report, at which point the fund’s reserves will be depleted and the program can only pay 77% of total scheduled benefits. Medicare’s Hospital Insurance (HI) Trust Fund that pays Part A benefits will be able to pay 100% of total scheduled benefits until 2033, three years earlier than previous projections. At that point, the HI Trust Fund reserves will be depleted, and Medicare can only pay 89% of total scheduled Part A benefits. The Trustees note that lawmakers in Congress “have many options for changes that would reduce or eliminate the long-term financing shortfalls. Taking action sooner rather than later will allow consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

Key Insights

• Combining the projections of the OASI Trust Fund and the Disability Insurance (DI) Trust Fund, Social Security can only pay 100% of scheduled benefits until 2034, which is one year earlier than last year’s projection, at which time Social Security can only pay 81% of scheduled benefits. Under current law, the two funds cannot be combined absent a statutory change from Congress, though the combined projection is frequently reported to present the overall status of the Social Security program.
• Social Security’s projected long-term finances worsened due to the repeal of the Windfall Elimination and Government Pension Offset provisions at the start of this year, which increased projected Social Security benefits for some workers. The Trustees also adjusted assumptions for long-term fertility rates and the long-term share of GDP that accrues to workers in terms of labor compensation.
• The projections for Medicare’s HI Trust Fund also worsened this year, primarily because of higher actual expenditures in 2024 that raised the baseline level of spending for the Trustees’ long-term estimates. Medicare’s Board of Trustees also assumed higher growth in inpatient and hospice services over the early years of the projection, partially offset by adjustments to economic and demographic assumptions.
• Medicare’s Supplementary Medical Insurance (SMI) Trust Fund for Part B and Part D benefits does not face insolvency since its main financing sources of beneficiary premiums and transfers from the General Fund of the Treasury are automatically adjusted annually to cover costs for the upcoming year. Nevertheless, the report highlights rising Part B costs for outpatient hospital and physician-administered drugs, which place steadily increasing demands on taxpayers and beneficiaries to keep up with rising health care costs.
• To address Social Security and Medicare’s long-term financing challenges, CED has released recommendations to save Social Security and modernize Medicare. As part of a comprehensive package of reforms, Congress may consider benefit adjustments, revenue raisers, diversifying Trust Fund investments, implementing value-based care, and emphasizing primary care and care coordination.