While costs have exceeded net income since 2010, this is the first time in more than three decades that spending is expected to outweigh total income, by about $2 billion, meaning asset reserves will decline.
Medicare's Board of Trustees blamed the earlier depletion forecast on lower payroll taxes in 2017 as a result of lower wages, less revenue from taxing Social Security benefits and higher-than-expected spending past year.
Medicare and Social Security are running out of money more quickly than expected, officials said Tuesday.
The country's main welfare program for retirees, Social Security, also faces an uncertain future.
The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive.
Democrats have for months asserted that Republicans would use the deficit - swollen by tax cuts - as "an excuse to cut Social Security and Medicare", in the words of Senator Chuck Schumer of NY, the Democratic leader. The report said that if the funds are depleted, the program could pay about three-quarters of benefits. Last year's tax-cut package reduced both Medicare and Social Security's projected revenue over the next few years.
Of the two programs, Medicare faces the greatest fiscal challenges as medical costs increase and the USA ages, with many baby boomers set to retire in the next several years.
They have called for increasing spending, which they would pay for with major tax increases, particularly on higher-income Americans.
In 2017, Medicare covered 58.4 million people, with 49.5 million older than 65.
The trustees estimate that by 2034 the combined trust funds for Social Security - which help fund the old age and disability programs - will run dry.
The government says Medicare's financial problems are getting worse and Social Security's can't be ignored. Government economic experts who briefed reporters Tuesday said the tax bill and other recent legislative changes from Congress on balance worsened the condition of both programs. Or benefits could be cut by 21 percent for those who become eligible this year or later, said Tim Shaw, a senior policy analyst at the Bipartisan Policy Center.
Many Democrats, meanwhile, argue the problem is that the programs aren't generous enough.