Just Another Government Shutdown

Kristin Orman By Kristin Orman, Research Analyst, The Oxford Club

Mailbag
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From the Mailbag:

The September 30 deadline has come and gone, and we’ve just narrowly avoided another government shutdown. That doesn’t mean it won’t happen in December. I’m worried about what that might mean for my retiree benefits. Will I still receive my Social Security payments? Will I still be able to go to my doctor and use my Medicare coverage?

It seems like Congress has been partying like it’s September 2013, doesn’t it? No wonder you are nervous. Lucky for you, if history repeats itself, Social Security and Medicare shouldn’t be affected.

Little has changed since September 2013. We are experiencing a nasty case of déjà vu. Democrats and Republicans are still fighting. It’s what they do.

In 2013, the Obamacare funding disagreement resulted in a 16-day partial government shutdown. This year, they have been fighting over Planned Parenthood. The clock was ticking as Congress struggled to come up with a plan to fund the government through December 11.

It did. But we aren’t out of the woods yet. Congress gets to party all over again in December. And there is an even greater risk of a shutdown then.

The costs of a government shutdown – or even the costs of simply preparing for one – are enough to make any taxpayer sick. Even worse, the imminent threat of one has created unnecessary stress for many retirees regarding their Social Security payments and other government-funded benefits they depend on.

The Good News

The good news is you can relax. If the next shutdown is anything like the one in 2013, Social Security checks will continue to be paid out to beneficiaries on time. It’s highly unlikely the government will fail to send Social Security. Retirees are an important voter group, and we have a pivotal election coming up next year. Also, funding for Social Security is considered “mandatory.”

Likewise, current Medicare and Medicaid beneficiaries will likely notice little or no interruption in their coverage. The government will continue to make payments to providers. If not, most doctors will continue to provide services, expecting payment once the funding crisis has passed.


The Not-So-Good News

But if you are a recent retiree, your government shutdown picture is not as rosy. There is a good chance your benefits will be significantly delayed. There will be no employees available to process your Social Security, Medicare or Medicaid applications. Unlike your Social Security benefits, funding to pay the employees that staff these agencies is not mandatory.

What Else Will Likely Be Affected

In the event of a partial or full government shutdown, many other services could be affected. A list of some of the more common ones is below.

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All’s Well That Ends Well

If a government shutdown occurs, I doubt it will last more than two or three weeks. However, that may be enough time to cause a disruption in most of our lives. It will dent U.S. economic growth, too.

But at least those relying on Social Security and Medicare shouldn’t have to worry about an interruption in their benefits.

Good investing,

Kristin