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Would Your Money Be Affected by a Government Shutdown?

Douglas Rissing / Getty Images/iStockphoto
Douglas Rissing / Getty Images/iStockphoto

In late 2023 and early 2024, there were warning signs of a government shutdown, but it was averted by continuing resolutions and stopgap measures. On March 22, 2024, Congress passed appropriations bills to fully fund the government through the remainder of the fiscal year, preventing a partial government shutdown.

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While there’s no longer a concern about a government shutdown for the remainder of the 2023-24 fiscal year, it’s important to know how one would impact your finances if it were to occur in the future. Here’s what you need to know.

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What Is a Government Shutdown?

A government shutdown occurs when federal departments and agencies don’t receive their expected funding from annual appropriations bills. The funding lapse happens when Congress fails to pass bills approving financial resources or the president refuses to sign congressionally approved bills.

Since Congress first enacted a federal budget deadline in 1974, there have been 10 instances of government shutdowns. Some lasted just a few hours, while the most recent — in the winter of 2018 — persisted for over a month.

Will I Receive a Paycheck During a Government Shutdown?

It depends. If you work for the federal government and are not an excepted or exempt employee, it’s likely that you’ll be furloughed. Each governmental agency sets its own policies concerning excepted and exempt employees, but here’s a list of people who are most likely to go without pay.

Military Service Members

During a government shutdown, active-duty service members continue to work, but they may not receive their paychecks. According to the most recent Department of Defense contingency plan, there are more than 2 million active-duty service members who would carry on with their responsibilities.

Reserve service members would work only if they’re on Active Guard Reserve (AGR) duty or if an excepted purpose arises, such as a national security incident. Military service members would receive back pay for the duration of the government shutdown once funding resumes.

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Civilian Federal Employees

The majority of civilian federal employees would be placed on furlough until the government shutdown ends. Furloughed employees can’t perform any of their typical duties, even voluntarily. However, once the government shutdown ends, they would receive back pay for the time they were furloughed.

Each governmental agency can designate its employees as excepted or exempt. An excepted employee must continue to perform their work, but they won’t receive pay until the shutdown ends. Excepted employees’ duties include preserving the safety of others or protecting property.

An exempt employee is one whose salary comes from a source other than the annual appropriations bills. Exempt employees continue their work as usual, and they’ll receive regular paychecks throughout the shutdown.

A few of the agencies with civilian federal employees include:

  • Department of Agriculture

  • Department of Commerce

  • Department of Energy

  • Department of State

  • Department of Transportation

  • Department of the Treasury

Like military service members, both excepted and furloughed civilian federal employees would receive back pay once the shutdown ends. The government stipulates that retroactive pay should be paid as soon as possible, regardless of any predesignated regular pay dates.

Will I Continue To Receive My Social Security Benefits?

Yes. Social Security benefits aren’t impacted by a government shutdown, so recipients will continue to get their regular checks. That’s good news for retirees and others who are dependent on their monthly Social Security income.

Medicare and Medicaid recipients will also continue to receive their healthcare benefits, since both programs aren’t part of the annual appropriations funding. However, some Social Security activities would stop during a government shutdown, such as benefit verifications and earnings record corrections or updates. Anyone who loses their Medicare card would need to wait for a replacement until the shutdown ends.

Do Military Retirees, Disabled Veterans and Survivors Continue To Receive Benefits?

Yes. All military retirees will receive their regular retirement benefit checks. Families of deceased veterans who receive pension checks through the Survivor Benefit Plan will also continue to receive regular payments.

Disabled veterans will continue receiving their Veterans Affairs disability benefits. However, if a shutdown extends longer than a few weeks, there is a potential for delayed payments.

How Does a Government Shutdown Impact SNAP Benefits?

The Supplemental Nutrition Assistance Program provides monthly benefits to qualified recipients to help pay for groceries. The U.S. Department of Agriculture oversees the program in partnership with state agencies and private entities.

If a government shutdown occurs, recipients should continue to receive benefits for at least one month. The USDA could rely on contingency reserves to cover future monthly benefits if necessary. However, if the USDA doesn’t properly instruct the states to disburse funds, there may be an interruption in benefits.

Will I Continue To Receive WIC Benefits?

The Special Supplemental Nutrition Program for Women, Infants and Children is another USDA-administered program that provides supplemental foods like infant formula for low-income parents. In the case of a government shutdown, WIC recipients would stop receiving their benefits until funding resumes.

How Does a Government Shutdown Impact National Parks, Museums and Travel?

In the event of a government shutdown, national parks will close, and most services will stop. Some parks may remain publicly accessible if their physical characteristics make it impractical to close them. However, no regular maintenance or visitor services will be available.

Federally operated museums, such as the Smithsonian museums, may remain open for a limited time using prior-year funds. However, if a prolonged shutdown occurs, they would close until funding is approved.

Airports would remain open during a government shutdown. However, many critical employees, including air traffic controllers and Transportation Security Administration agents, would work without pay. If workers take unscheduled leave, it may result in travel disruptions or delays.

Final Take

Even if you’re not a military service member or civilian federal employee, a government shutdown can have a trickle-down impact on your wallet and daily activities. Certain food-related benefits, including SNAP and WIC, may cease until funding resumes.

Social Security, military pensions and disability payments will continue, but there may be certain interruptions for some services. Understanding how a shutdown will impact your finances can help you prepare appropriately.

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This article originally appeared on GOBankingRates.com: Would Your Money Be Affected by a Government Shutdown?