Medicare is one of the more confusing insurance programs available for some people. There are many moving pieces to know and understand to get the most out of your benefits. However, one thing you may be curious about is how Medicare can support all these different people. How is medicare insurance fort myers fl funded? Medicare is financed through a variety of sources.
What is Medicare?
Before understanding who or what funds Medicare, it’s helpful to have a basic understanding of what it is and how it works. Medicare is a federally run health insurance program for those 65 and older. People with qualifying disabilities and health conditions can also be eligible for Medicare before 65.
There are four different Medicare parts. The first two are Medicare Part A and Part B, the foundation of your Medicare coverage. Part A helps cover your inpatient needs, while Part B helps cover your outpatient care. These two parts are the only parts delegated by the federal government. Private insurance companies run all other Medicare parts and plans under the guidelines set in place by the federal government.
The third part is Medicare Part C, also known as Medicare Advantage plans. If you sign up for an Advantage plan, you receive your Part A and Part B benefits through a private insurance carrier instead of the federal government. The last part is Medicare Part D, which helps cover your retail prescription medications.
In addition to these four parts are Medicare Supplement (Medigap) plans. Medigap plans help cover costs left over after Medicare pays. This can include copayments, coinsurance, and deductibles.
How are these parts and plans funded?
There are two major trust fund accounts that finance Medicare. These accounts are specifically dedicated to the Medicare program. The money going into these accounts comes from different sources like payroll taxes, monthly premiums, interest, and more.
Hospital Insurance Trust Fund
The first trust fund is known as the Hospital Insurance (HI) fund. The HI account helps fund Medicare Part A, including costs for room and board, home health care, hospice care, and more. Most of the HI account is funded through payroll taxes people pay through their jobs, income taxes, and interest.
People who do not qualify for premium-free Part A also help fund the HI fund. Most people pay $0 each month for Part A due to having enough work credits in the U.S. However, those that don’t have enough work credits pay a monthly premium. In 2022, you would pay either $274 or $499 each month for Part A, depending on how many work credits you have.
Supplementary Medical Insurance Trust Fund
The second trust fund is called the Supplementary Medicare Insurance (SMI) fund. The SMI fund help pays for Medicare Part B and Part D benefits. Like the HI account, the SMI account receives money from a few different sources, including, Congress-authorized funding, Medicare beneficiary Part B and Part D premiums, and more.
Medicare Program Administration
The HI and SMI funds help fund Medicare Program administration costs, including the cost of beneficiary benefits and the acquisition of Medicare taxes.
On top of this, both accounts help support the prevention of Medicare fraud and abuse, an ongoing issue among older adults.
Medicare receives funds from several places, including money paid by Medicare beneficiaries. Some people begin their Medicare journey thinking Medicare is a free program. However, as you can see, this is not the case, as the program does need to receive funds from somewhere.
Before beginning Medicare, it’s always helpful to read up on how to apply for Medicare and the costs you can expect with Medicare, so you don’t run into surprises!