What Does Medicare Cost ?

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).

Medicare Cost

Rising Medicare budget

Medicare and Federal Budget

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