What does Medicare cost? Most people think their $144.60 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 $144.60 Part B premium only covers 27 percent of the cost of Part B.
Part D plans have premiums ranging from $13 to over $100 – but the premium you pay for your drug plan covers only 15 percent of the actual cost.
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).
And here’s the BIG PROBLEM for Medicare: The yearly Medicare budget is going to double in just ten years!