How is Medicare funded?

Medicare Trust Funds

Medicare is paid for through 2 trust fund accounts held by the U.S. Treasury. These funds can only be used for Medicare.

Hospital Insurance (HI) Trust Fund

How is it funded?

• Payroll taxes paid by most employees, employers, and people who are self-employed – See publication 15 pdf
• Other sources, like income taxes paid on Social Security benefits, interest earned on the trust fund investments, and Medicare Part A premiums from people who aren’t eligible for premium-free Part A

What does it pay for?

• Medicare Part A (Hospital Insurance)benefits, like inpatient hospital care, skilled nursing facility care, home health care, and hospicecare
• Medicare Program administration, like costs for paying benefits, collecting Medicare taxes, and combating fraud and abuse

Supplementary Medical Insurance (SMI) Trust Fund

How is it funded?

• Funds authorized by Congress
• Premiums from people enrolled in Medicare Part B (Medical Insurance) and Medicare prescription drug coverage (Part D)
• Other sources, like interest earned on the trust fund investments

What does it pay for?

• Part B benefits
• Part D
• Medicare Program administration, like costs for paying benefits and for combating fraud and abuse  copied from Medicare.Gov
•  
• Learn More ==> Kaiser Foundation, including spending