On May 6, 2024, your friendly Federal Government released the 2024 Annual Trustees Reports on Social Security and Medicare. While not a page-turner, the summary does contain a few salacious tidbits.
Understanding the Social Security and Medicare Trust Funds
The Social Security Administration manages four separate trust funds. Two are under Social Security:
- The Old-Age and Survivors Insurance Fund
- The Disability Insurance Fund
Two are under Medicare:
- Hospital Insurance
- Supplementary Medical Insurance
When you hear that Social Security and Medicare programs are going to run out of money, these are the trust funds that are being referenced.
Who Manages the Social Security and Medicare Trust Funds?
The trust funds are ostensibly administered by six trustees. Four of them have positions in the Federal Government:
- Secretary of Treasury
- Secretary of Labor
- Secretary of Health and Human Services
- Commissioner of Social Security
For the 2024 report, those were Janet Yellen, Julie A. Su, Xavier Becerra, and Martin O’Malley.
Of course, the four are federal employees. That is interesting because federal employees have their own retirement system that isn’t available to the rest of us.
The other two positions are supposed to be “public representatives.” Although these positions are filled by political appointees, their purpose is to ensure a public voice in the management of the funds.
Guess which two positions have been vacant since 2015? You got it: the public representatives.
What Are the Annual Trustee Reports?
Every year the Trustees issue a report on the health of the trust funds. It’s illuminating to peek behind the report’s conclusions, which spring from actuarial estimates. Those estimates are based on all sorts of interesting assumptions about demographics, the economy, and the programs themselves. Those assumptions are then tempered by “complex” models based on formulas created by the Social Security Administration.
So, the trustee’s reports, issued by four government employees, are based on estimates backed up by assumptions manipulated by mathematical models too complicated for common folk like us to understand.
Are you getting a warm and fuzzy feeling yet?
The 2024 Annual Trustees Report Explained
Social Security Benefits
In the 2024 report, the trustees concluded that you would get 100% of your Social Security retirement benefits until 2033 when your payment drops to 79%.
Medicare Benefits
For Medicare, the trustees concluded that you would get 100% of your hospital benefits until 2036 when your payment drops to 89%.
Retirement and Benefits Cost
The summary contains all sorts of helpful tables. The one I liked was Table 6, titled “Program Costs, 2023.” It showed that paid 2023 retirement benefits were $1,227 billion. Paid hospital insurance benefits were $397 billion.
In addition to the expense of benefit payments, the Trusts are charged a management fee by the government. This is referred to as an “administrative expense.”
Going back to Table 6, the footnote says the classification includes expenses incurred by the Social Security Administration, the Department of Health and Human Services, the Department of the Treasury, and the “provisions of the Internal Revenue Code relating to the collection of contributions.”
The Government’s Cut
So, what did the government pay itself out of our Trusts? For retirement benefits, it scooped $4.4 billion off the top. For hospital benefits, it took a whopping $5.6 billion.
Hmm. Wonder how much could be saved if the government eliminated duplication among the agencies, computerized more functions, and laid off 50,000 or so government employees?
What the Annual Trustee Reports Actually Mean
Let’s summarize. The Trustee Reports are signed by four government employees who are not reliant upon social security benefits, are based upon estimates made from assumptions tweaked by complex mathematical models, and include billions of dollars of administrative expenses.
Move along, folks. Nothing to see here.
Hammerle Finley Law Firm is Here to Answer Your Social Security and Medicare Questions
If you’re looking for assistance understanding your social security and medicare options, contact the experts at Hammerle Finley Law Firm today to schedule a consultation.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at legaltalktexas@hammerle.com. This blog contains general information only and does not constitute legal advice.
