How Is Medicare Financed?
Understanding Medicare health insurance is a difficult chore. With the questions in everyone's mind regarding social security, it is often wondered what will become of Medicare as well. Many elderly Americans receiving Social Security benefits also have Medicare health insurance. Medicare health insurance is intended to insure the elderly of our country get the medical care that they need without using up all of their available resources paying for it.
Medicare Financing - Payroll Deductions
Each paycheck that we receive contributes to the financial support of Medicare. There is a deduction on each paycheck, first for FICA, which is Social Security tax and then another for Medical. There are many ways this is spelled out on the paycheck stub, but it has recently been separated from the Social Security line item for more clarity. The financing of medicare is handled through a percentage of pay being deducted and contributed to Medicare to assist in paying for the costs associated with it.
Can I Opt Out?
The answer to opting out of paying a Medicare tax deduction is no. This is a required payment as is Social Security taxes. As the population ages and the workforce lessens, a higher percentage is taken from those who are working to help pay for the insurance. The payment was separated from the Social Security deduction several years ago when it appeared that Social Security dollars were being lost. The separate line item shows individuals how their deductions are being used.
All Medicare recipients are required to pay a premium for their coverage as well as a deductible on care. This is because when Medicare was started, the price of health care was much lower than it is today. With the continued growth of the cost of health care, it is likely that these premiums will continue to increase each year.