Medicare is financed by which mechanism?

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Multiple Choice

Medicare is financed by which mechanism?

Medicare is financed primarily by payroll taxes. Workers and their employers contribute a dedicated Medicare tax under FICA, with each side typically paying 1.45% of earnings (self-employed individuals pay the full 2.9% under SECA). This dedicated tax funds the Hospital Insurance Trust Fund that supports Medicare Part A. While Parts B and D involve general revenues and beneficiary premiums, the main mechanism asked about for Medicare’s funding is these payroll taxes.

Medicare is financed primarily by payroll taxes. Workers and their employers contribute a dedicated Medicare tax under FICA, with each side typically paying 1.45% of earnings (self-employed individuals pay the full 2.9% under SECA). This dedicated tax funds the Hospital Insurance Trust Fund that supports Medicare Part A. While Parts B and D involve general revenues and beneficiary premiums, the main mechanism asked about for Medicare’s funding is these payroll taxes.

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