On Wednesday, October 1, at 12:01 a.m., the United States government will officially shut down for an unspecified amount of time, unless both the House of Representatives and the Senate can agree on a bill to fund several government programs, including Medicare and Social Security, before then. It will be the first shutdown since the end of 2018, and many Americans are anxious about what could happen. Below, we break down what you can expect from the potential government shutdown, including whether it will affect your health insurance and government payments.
What to know about the government shutdown
“A government shutdown occurs when Congress fails to pass a funding bill for federal agencies and programs. This is expected if no bipartisan funding bill is agreed to by October 1,” Katie Klingensmith, Chief Investment Strategist at Edelman Financial Engines, explains to Woman’s World. “In that scenario, many government services pause and nonessential federal workers are temporarily furloughed, likely resulting in a short-term hit to GDP [gross domestic product].”
This shutdown would be different than those of the past, says Klingensmith, noting, “The current administration has floated the idea of permanently laying off nonessential federal workers in the event of a shutdown.”
“If carried out, the impact would go beyond temporary furloughs. It would mean an increase in unemployment, a lasting reduction in government services and potential knock-on effects to local economies that rely on federal workers’ income.”
Does the government shutdown affect Social Security payments?
Even though funding for programs like Medicare and Social Security is a big topic of conversation for Congress during the government shutdown, Klingensmith assured that “Essential services—like Social Security and Medicare payments, the military and air traffic control—continue.”
Javier Palomarez, Founder and CEO of the United States Hispanic Business Council (USHBC), agrees that essential services will continue, but he warns of factors that could affect some of these programs in the future.
“Social Security payments, Medicare, SNAP [Supplemental Nutrition Assistance Program] and other critical programs are deemed mandatory by the federal government. This means that even in the event of a shutdown, those services continue,” he tells Woman’s World. “However, the longevity of that continuation is largely dependent on the amount of remaining funds each program has that have already been appropriated. For example, CMS [Centers for Medicare & Medicaid Services] is stating that they already have enough funding for the first quarter of next year.”
“SNAP is in a similar situation under USDA [United States Department of Agriculture],” he continued. “However, tangential aspects of these programs, such as replacement cards and support, could be slowed or halted depending on the agency.”
Other organizations that will not be affected by a potential government shutdown include the United States Postal Service (USPS), law enforcement, Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP) and Transportation Security Administration (TSA).
Despite this, several programs are expected to close down in some capacity during the potential shutdown. These include national parks and museums, so if you are planning to visit one, it’s important to double check that they are operating normally.
How to prepare for a government shutdown
If you’re one of the millions of Americans worried about whether the potential government shutdown will affect you, Klingensmith offers this advice: “Government shutdowns can sound alarming, but it’s important to keep things in perspective. Typically, shutdowns are temporary events that create headlines and some market volatility, but the economy and markets have bounced back once funding is restored.”
“From a financial-planning standpoint, the key takeaway is that your benefits are safe, and a diversified portfolio is built to withstand this kind of short-term turbulence. Staying disciplined and not overreacting to the headlines is the best approach.”
