What happens to Social Security and Medicare if the government shuts down?
If the federal government does shut down this weekend will Social Security and Medicare keep operating?
Both programs are considered “mandatory” under federal law, meaning that they do not require periodic funding action by Congress. That means Social Security benefits and Medicare claims will continue to be paid. The two government agencies that administer these critical programs (the Social Security Administration and the Centers for Medicare & Medicaid Services) will keep sufficient staff working to keep the lights on.
That’s not to say there wouldn’t be disruptions from this completely unnecessary circus. The shutdown will begin at midnight Saturday, unless Republicans in the House of Representatives can find a way out of their brawl over spending. They would need to agree on a plan sufficiently moderate that it can muster support in the Senate and from the White House, both of which are controlled by Democrats.
Here are a few important things to know about Social Security and Medicare in the event of a federal government shutdown:
Social Security and Medicare will continue to process new applications for benefits.
The Annual Enrollment Period (AEP) for Medicare will not be affected. The AEP runs from October 15th through December 7th, and provides an opportunity for Medicare enrollees to make new coverage elections. (I’ll be writing more about the AEP next month.)
Announcement of the 2024 Social Security cost-of-living adjustment (COLA) could be delayed. The COLA is scheduled to be announced on October 12th after the U.S. Bureau of Labor Statistics (BLS) releases Consumer Price Index figures for the month of September. If BLS staff are furloughed at that time, it’s likely that the COLA news will be delayed. Currently, it looks like the COLA will be around 3% or a bit higher. Payment of the COLA is scheduled to start in January.
Key Medicare costs for the year ahead usually are announced in the fall, sometime after the COLA news. These include the Part A deductible, Part B premiums and deductible amounts, and thresholds for high-income premium surcharges (IRMAA). Depending on the length of a shutdown, this announcement also could be delayed.
CMS call center operations would continue, but outreach and communications could be impaired as much of the CMS staff that oversee these operations would be furloughed. For example, CMS regional staff who support people with Medicare when problems arise and who conduct outreach activities for people with Medicare, health care providers, and other health care stakeholders would be mostly furloughed, according to an agency spokesperson.
Medicaid has sufficient funding to keep operating for three months under a shutdown scenario.
Social Security disability benefit hearings and appeals would slow down or halt, adding to the already-huge backlog of people awaiting benefit decisions.
Retirement Reboot made the shortlist!
My recent book was named to the shortlist of finalists for the Best in Business Book Awards sponsored by the Society for Advancing Business Editing and Writing (SABEW).
Retirement Reboot: Commonsense Financial Strategies for Getting Back on Track was selected along with three other finalists for the best investing or personal finance book of 2023. The book walks you through the core decisions to make now to improve your retirement outcome—even if your planned retirement is just a few years away.
SABEW is the world’s largest and oldest organization of business and financial journalists. The final award selections will be announced later this fall.
What I’m reading
The high-wire act of caregiving and saving for retirement . . . It’s rare, but workers sometimes lose 401(k) assets when employers go bankrupt . . . The Great Recession cut retirement wealth for late boomers . . . Indexing is still the best bet for investors . . . Midlife transition programs come of age - here’s how we can make them better. . . The ideal retirement age for your health . . . How to choose between T-Bills and Treasury bonds when the yield curve inverts . . . Falling index fund fees are approaching zero . . .The magic of the granny flat . . . A New Jersey lawsuit could bring aid in dying to millions . . . You won’t lose weight on Ozempic forever. . .When will we help the caregivers?