How is Medicare funded?

How is Medicare funded

You might be wondering how Medicare works, especially since many people are eligible for premium-free Part A coverage. It must be paid for by someone, right?

The federal Medicare program is overseen by the Centers for Medicare and Medicaid Services (CMS). It is funded by two trust fund accounts held by the U.S. Treasury.

These trust accounts are funded by payroll taxes paid by most employers, employees, and self-employed individuals. Income taxes on Social Security Benefits are also included in the trusts, as well as interest earned on investments. Part A premiums, Part B premiums, Part D premiums, and funds authorized by Congress make up the rest of the cost of Medicare.

Anyone who has been employed at any time since 1965 (the year Medicare was founded) has helped pay for this health care coverage. That’s why we recommend enrolling in Medicare as soon as you are eligible!

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