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How are medical insurance benefits funded?

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at

138. How are medical insurance benefits funded?

To pay for Medical Insurance Benefits, the law provides for the collection of monthly premiums. The people enrolled in the program (or in some cases, the State) pay these premiums. (See §2400.) Since the premiums cover only about one-fourth of the cost of the program, the Government pays the remaining amount from general revenues.

Starting in January 2007, people enrolled in Medicare Part B with modified adjusted gross incomes over a set threshold will begin to pay a higher percentage of their total Part B premium costs. Increases in Part B premiums for these individuals will be phased in from 2007 to 2009.

For more information on the Medicare Part B premium amounts, see §2400.

Last Revised: May 22, 2007

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