What does Medicare cost? Most people think their $170 Medicare Part B premium covers the cost of their Medicare – but they are very wrong.
You can see from the charts below that there are three parts to Medicare: Part A (Hospital Insurance); Part B (Medical insurance); Part D (Drug insurance)
Part A is financed primarily through a 2.9 percent tax on earnings paid by employers and employees (1.45 percent each).
Part B is mostly funded through general revenues, meaning taxes collected from people and businesses. Your $170 Part B premium only covers 27 percent of the cost of Part B.
Part D plans have premiums ranging from $7.50 to over $100 – but the premium you pay for your drug plan covers only 15 percent of the actual cost.
And here’s the BIG PROBLEM for Medicare: The yearly Medicare budget is going to double in just ten years!
This chart is from the Kaiser Family Foundation report on Medicare cost and revenue sources.
I added some text to it. The red section means funding is coming from the federal budget (general revenue).
