Recently there has been a lot of talk about the depletion of Social Security’s trust funds and projections that in a few years there will not be enough money to pay 100 percent of Social Security benefits to those who are owed either retirement or disability payments. These projections can change from year-to-year and things have, and probably will change in upcoming years, but it is important to understand just what the trust funds are. The Social Security trust funds pay retirement and disability benefits and help fund Medicare.
Where Are Social Security Tax Amounts Deposited?
Amounts equivalent to the Social Security taxes are deposited in three separate trust funds:
- The Federal Old-Age and Survivors Insurance Trust Fund;
- The Federal Disability Insurance Trust Fund; and
- The Federal Hospital Insurance Trust Fund.
- The Federal Hospital Insurance Trust Fund also receives the amounts appropriated from general revenues on account of “uninsured” persons age 65 and over.
What Is The Federal Supplementary Medical Insurance Trust Fund?
The Federal Supplementary Medical Insurance Trust Fund receives the amounts collected as premiums for medical insurance coverage and the amounts appropriated from general U.S. revenues. This trust fund covers the Government’s share of the cost of the program.
Who Is Responsible For Managing The Trust Funds?
A Board of Trustees holds the funds for the Social Security Trust Funds. By law, the Board of Trustees is composed of the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, and two members of the public appointed by the President and confirmed by the Senate. The Commissioner of Social Security serves as the Secretary of the Board of Trustees for the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. The Administrator of the Centers for Medicare & Medicaid Services serves as Secretary of the Board of Trustees for the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund.
Where Is The Money In The Trust Funds Spent?
The deposits in the four trust funds are used for the retirement, survivors, disability, hospital, and medical insurance programs. The trust funds also cover administrative expenses associated with these programs. Excess funds are invested in interest-bearing Federal securities.
