CRR Publishes Issue Brief on Medicare 2026 Trustees Report

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CRR Publishes Issue Brief on Medicare 2026 Trustees Report

On July 15, 2026, the Center for Retirement Research (CRR) at Boston College published its issue brief, Medicare Finances: A Perspective on the 2026 Trustees Report. The brief summarizes the current state of Medicare’s finances based on the 2026 Medicare Trustees Report released in June 2026.

The brief provides: 1) an overview of the Medicare program; 2) the 2026 Medicare Trustees Report’s projections that use current law assumptions; 3) a comparison of the current-law projections to an alternative scenario prepared by Medicare’s Office of the Actuary; and 4) some possible reasons that Medicare’s expenditures are expected to outpace Social Security.

The report indicates that Medicare is the largest U.S. public health program that covers nearly all individuals age 65 and over in addition to those who receive federal disability insurance benefits. According to the report, the Medicare program accounts for 21% of the national health care spending and 14% of the federal budget.

Some of the other key findings include:

  • Overall, the Medicare program, which operates within the U.S. health care system, is very expensive and costs twice as much as health care systems in other countries.
  • The findings indicate that if the constraints on reimbursements to physicians and hospitals prevent Medicare beneficiaries from accessing care, it is likely that costs will increase significantly higher than the Trustees project.
  • Medicare Advantage plans cover more than 50% of beneficiaries, which costs 14% more per person than traditional Medicare.
  • Controlling Medicare costs should be addressed that would require a long-term plan to redesign the U.S. health care system and, in the short term, reduce overpayments for Medicare Advantage plans.

The brief states, “In contrast to Social Security, where population aging can explain all the growth in expenditures over the next 30 years, an aging population explains much less than half of projected future growth in Medicare. The rest comes from the costs for hospital and physician services rising faster than [Gross Domestic Product] GDP.” It adds, “With Medicare growing so quickly, its outlays will surpass Social Security expenditures in 11 years. And by 2100, the end of the projection period, Social Security accounts for 6.7 percent of GDP, while, as noted, Medicare equals 7.5 percent under the Trustees’ current-law assumptions and 9.8 percent under the actuaries’ alternative projections. It should be at the top of everybody’s worry list.”

The brief is available here.

American Academy of Actuaries Publishes Brief on the Actuary’s Role in Public Pension ALM Studies

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American Academy of Actuaries Publishes Brief on the Actuary’s Role in Public Pension ALM Studies

Recently, the American Academy of Actuaries (AAA) published its issue brief, The Actuary’s Role in Public Pension ALM Studies. This publication was prepared by members of the AAA’s Public Plans Committee. The brief provides information on an approach for public pension plans to help improve risk management by using an Asset Liability Management (ALM) study. Although some ALM studies may be conducted by investment advisors alone, the brief discusses the importance of collaborating with the plan’s actuary to ensure a comprehensive risk management approach.

According to the brief, “An ALM study takes a holistic approach that integrates forecasts of assets and liabilities to inform policy decisions for managing a pension plan. It can be used to assess a pension plan’s investment policy, contribution policy, or any other policies or measures that depend on the changes in assets and liabilities under various scenarios.”

The brief concludes, “To maximize the benefits from an ALM study, the analysis should go beyond investment performance to include a range of implications such as contribution requirements, funded status, and, when applicable, changes in benefits. Actuaries, with their expertise in liability measurement and funding methods, are critical to understanding tradeoffs involving plan funding. Investment professionals bring insight into the asset and operational risks of investment policies and portfolios. Ultimately, combining the expertise of actuaries and investment professionals may allow the system to better satisfy the fiduciary responsibilities of governing a public pension plan.”

Among other members, the AAA’s Public Plans Committee includes Judith Kermans, President, CEO and Senior Consultant at GRS. In addition, the AAA’s Committee recognized the contributions of James Rizzo, a retired Senior Consultant of GRS. 

The issue brief is available here.

 

CRR Examines the Impact of AI on Older Workers’ Careers

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CRR Examines the Impact of AI on Older Workers’ Careers

Recently, the Center for Retirement Research (CRR) at Boston College published its issue brief, Are the Careers of Older Workers Being Cut Short by AI? In the brief, CRR analyzes the impact of Artificial Intelligence (AI) on the future of work for those adults ages 55 and over. The brief indicates that although familiarity with AI is increasing, many older workers are concerned about job loss, displacement, and workplace disruption.

Some of the key findings include:

  • Based on the level of AI exposure, the analysis examined the rates of job exits from before and after ChatGPT was launched in November 2022.
  • Since AI can automate certain tasks, some workers with those job responsibilities may potentially be displaced.
  • According to the results, there was an increase in job exits for those with high-exposure jobs (such as computer programmers, accountants and auditors) since the significant rise in AI usage.
  • However, many high-exposure jobs still have lower exit rates compared to those in low-exposure jobs that require more physical work (such as nurses, home health aides and painters). 

The brief concludes, “The analysis suggests that the issue of AI-exposed jobs and older workers is worth keeping an eye on. The significant increase in exit from work threatens older workers in exposed jobs with shorter careers if they cannot find new work. As policymakers consider changes to Social Security that could necessitate longer careers, they should be aware that this new technology could be pushing some workers in the other direction.”

The brief is available here.

CRR Publishes Brief on the Financial Outlook of Social Security in 2026

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CRR Publishes Brief on the Financial Outlook of Social Security in 2026

On June 16, 2026, the Center for Retirement Research (CRR) at Boston College released its issue brief, Social Security’s Financial Outlook: The 2026 Update in Perspective. As presented in the issue brief, CRR analyzed the 75-year deficit in Social Security benefits projected in the recently released 2026 Social Security Board of Trustees Report.   

The key findings include:  

  • The Social Security Trustees Report indicated that the 75-year deficit increased from 3.82% in 2025 to 4.42% of taxable payroll in 2026.
  • The depletion date for the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds reserves remains 2034 (the same as last year’s report) with 83% of benefits payable at that time.
  • The projected depletion date for the OASI Trust Fund reserves decreased from 2033 last year to 2032 this year, when the program will only be able to pay 78% of scheduled retirement benefits.
  • A lower assumed disability incidence rate allows the DI Trust Fund to pay full benefits for the next 75 years.

Notably, the change in the deficit is significantly higher than last year’s report. The increase is mainly due to the new projections including changes that greatly reduce future revenues including: 1) a substantial reduction in the fertility-rate assumption; 2) lower assumed levels of temporary and unlawful immigrations; and 3) a reduction in income tax revenues from taxing Social Security benefits under the One Big Beautiful Bill Act (OBBBA). The brief states, “These three changes plus moving the valuation period and changing the methodology, which reduce the actuarial balance by 0.81%, are partially offset by two significant – and somewhat surprising – positive changes in assumptions: increased productivity and higher mortality rates.”

The brief concludes, “Social Security is facing a long-term financing shortfall and needs to be fixed. Even with a deficit that equals about 1.5 percent of GDP, the changes required to fix the system are well within the bounds of fluctuations in spending on other pro­grams in the past. Moreover, action needs to be taken quickly, before the OASI trust fund is depleted and benefits are cut in 2032. Numerous options are available on both the revenue and benefit sides to close the gap. All that is needed is the political will.”  

The brief is available here.

NASRA Updates COLA Issue Brief

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NASRA Updates COLA Issue Brief

On June 10, 2026, the National Association of State Retirement Administrators (NASRA) released its issue brief, Cost-of-Living Adjustments, which updates an earlier version published in August 2025. The brief covers the: 1) purpose of Cost-of-Living Adjustments (COLAs); 2) types of COLAs; 3) costs of COLAs; 4) recent state COLA legislative changes; 5) recent initiatives to develop policies or fund for future COLAs; and 6) impact of inflation on COLA changes. 

According to the brief, the design of public pension COLAs varies greatly. Most state and local government pension plans provide some form of COLAs to offset or reduce the effects of inflation on retirement income. In addition, COLAs are important for state and local government employees who do not participate in Social Security in order to supplement their income during disability or normal retirement. Typically, governments prefund the cost of a COLA over an employee’s working career.   

In addition, the report provides a summary of COLA provisions by state-level plans, including any recent legislative changes. According to the report, of the 101 selected state-level plans that provide COLAs, 74 plans provide them on an automatic basis and 27 plans provide them on an ad hoc basis.    

Since 2009, 17 states have changed their COLAs for current retirees, eight states have changed COLAs for current employees’ benefits and seven states have changed COLAs for future employees only. However, in several states, the legality of these changes has been challenged. In addition, some states are including provisions that would allow COLAs to increase if the plan’s funding status or fiscal conditions improve or if inflation rises.   

The brief concludes, “The effects of a COLA can be consequential both in protecting the purchasing power of beneficiaries and in adding costs to a plan. Policymakers and public pension plan sponsors are challenged to balance three key variables: benefit adequacy, plan sustainability, and affordability. Amid the recent spike in inflation, policymakers and, in certain cases, public pension trustees, continue to reexamine all aspects of benefit design and financing, including the way COLAs are determined and funded.” It adds, “the recent spike in inflation led some states that do not provide an automatic COLA to grant an ad hoc COLA for the first time in several years.”

The report also includes an appendix with a listing of COLA provisions for many state-level retirement plans and identifies the applicable changes from 2009 through 2026. 

The brief is available here.

Medicare Trustees Release the 2026 Report on the Financial Status of Medicare Funds

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Medicare Trustees Release the 2026 Report on the Financial Status of Medicare Funds

On June 9, 2026, the Medicare Board of Trustees released its annual report on the financial status of the Medicare funds. According to the report, total income for the Medicare program in 2025 amounted to about $1,226 billion. In 2025, total annual Medicare expenditures were about $1.2 trillion, up from the prior year’s total of $1,122 billion. This growth is mainly due to lower birth rates and immigration, higher projected costs of Medicare Advantage plans and certain provider payments, and the enactment of the One Big Beautiful Bill Act (OBBBA).

The 2025 Medicare expenditures amounted to about 4.0% of Gross Domestic Product (GDP), and are expected to grow to 6.7% of GDP by 2099. The report warns that Medicare expenditures are projected to increase in future years at a faster rate than either aggregate workers’ earnings or the overall economy. 

The Medicare program consists of two component programs for the elderly and disabled: Hospital Insurance (HI) and Supplementary Medical Insurance (SMI). The HI program (Medicare Part A) pays primarily for inpatient hospital care and is financed by a payroll tax of 1.45% of taxable earnings. The SMI program consists of Medicare Parts B and D. Medicare Part B is a voluntary program that pays for physician, outpatient hospital, home health, and other services. Medicare Part D is a voluntary program providing access to outpatient prescription drug benefits. Approximately one-quarter of the SMI program is financed by beneficiary premiums, with the remainder financed by transfers from the U.S. Treasury’s general fund.   

According to the Medicare Trustees’ 2026 report, the long-term financial status of the HI Trust Fund has worsened with a 0.14% increase in the actuarial deficit of 0.56% of taxable payroll, compared to 0.42% in last year’s report. The HI Trust Fund is projected to be insolvent in 2033 (one quarter earlier than last year’s projection) and total spending in 2099 is projected to increase by 13% (0.8% of GDP) compared to previous baseline estimates. 

The financial outlook for the SMI program is better than the HI program. Under current law, each account within SMI is automatically in financial balance. For both Medicare Parts B and D, revenues are projected to equal expenditures for all future years, but only because beneficiary premiums and general revenue transfers must, by statute, be increased to meet expected costs for each year. However, the rapid growth of health care costs is expected to greatly accelerate the need to finance these benefits. 

The report indicates that the projections show that change is needed to address Medicare’s financial challenges. The Trustees continue to recommend that Congress and the executive branch work closely together to quickly address these challenges.   

The report is available here.

Social Security Trustees Release the 2026 Report on the Status of Social Security Funds

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Social Security Trustees Release the 2026 Report on the Status of Social Security Funds

On June 9, 2026, the Social Security Board of Trustees released its annual report on the program’s financial and actuarial status. In 2025, the Social Security program paid benefits of $1.60 trillion to about 70 million beneficiaries. According to the report, the combined assets of the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds are projected to be able to pay 100% of total scheduled benefits until the third quarter of 2034 (unchanged from last year’s report). Should this occur, the Social Security program would be able to pay only 83% of scheduled annual benefits at that time. The report states that the “two funds could not actually be combined unless there was a change in the law, but the combined projection of the two funds is frequently used to indicate the overall status of the Social Security program.”

When the two Social Security trust funds (OASI and DI) are examined separately, the OASI Trust Fund is projected to be depleted in the fourth quarter of 2032 (one quarter earlier than last year’s estimate) with 78% of benefits payable at that time. The DI Trust Fund is not projected to be depleted during the 75-year period ending in 2100 (the last year of this report’s projection period).

According to the report, the Trustees project that the total annual cost of the program will exceed total annual income in all future years, as it has since 2021. In 2025, total income (including interest) to the combined OASI and DI Trust Funds amounted to $1.45 trillion and total expenditures from the combined OASI and DI Trust Funds amounted to $1.61 trillion.

Over the 75-year long-range period from 2026 to 2100, the actuarial deficit of the combined OASI and DI Trust Funds is projected at 4.42% of taxable payroll, up from 3.82% in 2025. Expressed in relation to the Gross Domestic Product (GDP), the annual cost of Social Security benefits is projected to increase from 5.3% of GDP in 2026 to a peak of about 6.9% in 2084, and decline to 6.7% by 2100. The Social Security benefit expenses are projected to increase as the U.S. population ages and the ratio declines of workers paying into the program per retiree.  

The report indicated that the primary changes that had the largest effects on the actuarial deficit were: 1) revisions to lower assumed ultimate total fertility rates; 2) reductions in projected immigration levels; and 3) legislative changes to benefit taxation under the One Big Beautiful Bill Act (OBBBA) enacted in July 2025. The OBBBA made permanent the lower ordinary income tax rates and adjusted tax brackets under the 2017 Tax Cuts and Jobs Act. As a result, the OASI and DI Trust Funds will receive lower future revenue levels from income taxation of Social Security benefits.

The Trustees recommended that lawmakers address the trust fund shortfalls in a timely way in order to gradually phase-in the necessary changes to allow workers and beneficiaries time to adjust their expectations and behavior as well as to protect future generations. 

The report is available here.

NASBO Releases Spring 2026 Fiscal Survey of States

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NASBO Releases Spring 2026 Fiscal Survey of States

Recently, the National Association of State Budget Officers (NASBO) released their semi-annual report, The Fiscal Survey of States: Spring 2026. The report updates information on the states’ fiscal conditions and presents aggregate and individual data on the states’ general fund receipts, expenditures and balances. The survey was conducted by NASBO and completed by the governors’ state budget officers in all 50 states.    

The report highlights governors’ budget proposals for fiscal 2027 and provides updated estimates for general fund spending, revenue and balances for fiscal 2026 as well as actual data for fiscal 2025. According to NASBO, in fiscal 2027, general fund ending balances are expected to continue declining for the third consecutive year, but are projected to remain elevated compared to historical levels. 

For fiscal 2027, the recommended budgets are estimated to increase by 0.6% for general fund spending. In fiscal 2027, 22 states are projecting lower general fund spending in recommended budgets compared to fiscal 2026 levels. In fiscal 2026, states estimated total general fund spending of $1.38 trillion, up 3.9% from the states’ originally enacted budgets for fiscal 2026. This increase was partially due to supplemental appropriations and one-time expenditures funded by surplus balances.

Other key findings include:  

  • For fiscal 2026 general fund revenue collections, 29 states reported exceeding original budgeted revenue projections, while nine states reported being on target to original estimates and 11 reported being below estimates.
  • For fiscal 2027, revenue projections are 2.5% higher than current estimates for fiscal 2026.
  • For fiscal 2027, governors’ budgets propose a combination of tax policy changes with 14 states recommending net increases and 19 states recommending net decreases, which would be a combined near-zero net impact on general fund revenues.
  • As a share of general fund spending, the median rainy day fund balance in fiscal 2026 and fiscal 2027 are expected to be maintained or increase although the balance as a percentage of expenditures is projected to decline slightly due to general fund spending increasing faster than reserves in the same year. The median rainy day fund balance decreased for the first time since the Great Recession, declining from an all-time high of 14.9% in fiscal 2024 to 13.5% in fiscal 2025. The current estimate for the median balance for fiscal 2026 is 13.1% and is projected to slightly decrease to 12.6% in fiscal 2027.
  • Total balances that include rainy day funds and general fund ending balances represented 31.7% as a share of total general fund expenditures at the end of fiscal 2025; as states draw down general fund balances, total balances are projected to be 23.5% of general fund expenditures in fiscal 2026 and 20.2% in fiscal 2027.   

The full report and summary are available here.

IRS Announces 2027 Inflation Adjustments for HSAs, HDHPs and Excepted Benefit HRAs

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IRS Announces 2027 Inflation Adjustments for HSAs, HDHPs and Excepted Benefit HRAs

Recently, the Internal Revenue Service (IRS) issued Revenue Procedure 2026-24 with the 2027 inflation-adjusted amounts for Health Savings Accounts (HSAs), High Deductible Health Plans (HDHPs), and Excepted Benefit Health Reimbursement Arrangements (HRAs). In addition, it included provisions established under the One Big Beautiful Bill Act (OBBBA) for the relatively new Direct Primary Care Service Arrangements (DPCSAs) to exclude certain DPCSAs from being treated as a health plan.  

For calendar year 2027, the annual contribution limit to an HSA under IRC § 223(b)(2)(A) for an individual with self-only coverage under a qualifying HDHP is $4,500. For calendar year 2027, the annual contribution limit to an HSA under IRC § 223(b)(2)(B) for an individual with family coverage under a qualifying HDHP is $9,000. 

For calendar year 2027, the IRS defines a HDHP under IRC § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,750 for self-only coverage or $3,500 for family coverage. In addition, the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $8,700 for self-only coverage or $17,400 for family coverage. 

For plan years beginning in 2027, the maximum amount that may be made newly available for the plan year for an Excepted Benefit HRA (under § 54.9831-1(c)(3)(viii)) is $2,250. Employers use Excepted Benefit HRAs to help cover the cost of employees’ vision, dental, or short-term, limited-duration insurance plan premiums.

For calendar year 2027, a Direct Primary Care Service Arrangement (DPCSA) established under the One Big Beautiful Bill Act (OBBBA) (added under IRC § 223(c)(1)(E)) is not treated as a health plan for an otherwise eligible individual if the aggregate monthly fees for all DPCSAs for an individual do not exceed $150 or $300 for an individual covered by any DPCSA that covers more than one individual. The $150 and $300 amounts are adjusted for inflation for months beginning after December 31, 2026. Generally, a DPCSA is not considered a disqualifying health plan if it provides primary care services for a fixed periodic fee and does not include certain services such as general anesthesia or non-standard lab work.

As set by statute, the HSA catch-up contribution limit remains unchanged since 2009 at $1,000 per year for eligible individuals age 55 or older.

Rev. Proc. 2026-24 is available here.

GRS Publishes Article on Understanding Social Security

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GRS Publishes Article on Understanding Social Security

On May 22, 2026, GRS published a GRS Perspectives article on “Understanding Social Security.” Written by Brian Murphy and Casey Ahlbrandt-Rains, this comprehensive article covers: 1) background information related to Social Security; 2) Social Security retirement benefit calculations; 3) early and late retirement benefits; 4) working after retirement; 5) family benefits; 6) disability benefits; 7) cost-of-living increases; and 8) Social Security’s financial condition. The article is intended to provide a general understanding of some common scenarios under the Social Security program and also help readers understand the financial issues facing Social Security.

According to the article, “Social Security is the foundation of retirement security for most people in the United States. It is one of the very few sources of inflation protected income available to retirees. It is of very great concern that the OASDI [Old Age, Survivors and Disability Insurance] reserve funds will likely be depleted within the next ten years. Unless Congress acts to address the problem in a timely manner, either sudden benefit reductions or sudden tax increases would be the result, either of which could be very disruptive and both of which could be quite harmful to the most vulnerable people.”

The article concludes that, “The authors encourage readers to learn as much as they can about the Social Security program and to advocate for change that addresses the financial issues the program faces while protecting the most vulnerable people.”

The article is available here.