what are the major sources of funding for medicare?

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Expert Solution

Assuming you are asking about USA.

There is famous saying that Health is Wealth so, medicare is a plays a very important function in a economy.

Major sources of funding for medicare:-

- Medicare is primarily funded through the Federal Insurance Contributions Act (FICA)

- Taxes from FICA goes to 2 trust funds that cover Medicare expenditures.

One is Medicare Hospital Insurance (HI) trust fund
Other is Supplementary Medical Insurance (SMI) trust fund

Medicare Hospital Insurance (HI) trust fund - Basically provides funding for Medicare Part A. Part A covers beneficiaries for hospital services.

Supplementary Medical Insurance (SMI) trust fund - basically provides funding for Medicare Part B and Medicare Part D. For Part B covers medical services for benefeciaries. Part D - partilly from SMI fund + partially from beneficiary premiums.

- Other Additional Sources for Medicare are -

Premiums from Medicare parts A, B, and D
Funds approved by Congress
Taxes paid on Social Security incomes

Federal Insurance Contributions Act (FICA) was enacted in 1935 which ensures funding for both the Medicare and Social Security programs through payroll and income taxes.

Rahul Sunny answered 1 year ago

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