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WASHINGTON (Reuters) – The coronavirus pandemic will cause the main U.S. Social Security trust fund reserves to be depleted in 2033, a year sooner than an estimate made a year ago, as a steep drop in employment shrank revenue, the U.S. Treasury said on Tuesday.
The Treasury said the Old Age and Survivors Trust Fund, which pays retirement benefits, would be able to pay 76 percent of scheduled benefits after 2033 from continuing payroll tax revenues.
Social Security’s separate Disability Insurance Trust Fund will see its reserves depleted in 2057, eight years sooner than last year’s estimate. Combined, the two Social Security trust fund reserves will be depleted in 2034, a year earlier than the estimate made a year ago, Treasury said.
The Medicare Hospital Insurance Fund reserves are expected to be depleted in 2026, the same as last year’s estimate. This will allow Medicare to pay only 91 percent of scheduled “Part A” hospital and other benefits from expected revenues at that time, Treasury said.
Part of the reason for the stable depletion date is the higher mortality rate from COVID-19, which reduces some long-term care costs, offset by higher expected healthcare costs for people weakened by the virus, a Department of Health and Human Services official told reporters.
Annual reports on both the Social Security and Medicare trust funds again said that congressional action will be needed in coming years to shore up the programs financially, by increasing revenue, cutting benefits, or finding other cost savings.
An added twist to this year’s Social Security report is a 3.1 percent estimated upward cost-of-living adjustment for benefits in 2021, the highest in a decade, due to higher inflation rates caused in part by supply shortages during the pandemic.