How is Medicare funded?

The Centers for Medicare & Medicaid Services (CMS) is the federal agency that runs the Medicare Program. CMS is a branch of the 

. CMS also monitors 

 programs offered by each state.

In 2016, Medicare covered over 56 million people. Total expenditures in 2016 were $678.7 billion. This money comes from the Medicare Trust Funds.

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
• Other sources, like these:
  • Income taxes paid on Social Security benefits
  • Interest earned on the trust fund investments
  • 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 [Glossary]
  , like inpatient hospital care,
  Skilled nursing facility (SNF) care
  ,
  Home health care
  , and
  Hospice
  care
• Medicare Program administration, like costs for paying benefits, collecting Medicare taxes, and fighting 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 fighting fraud and abuse