Funding of Medicare Part B and D

The Medicare Trustees’ 2024 report noted, the Supplemental Medical Insurance (SMI) Trust Fund is adequately financed into the indefinite future because, unlike the other trust funds, its main financing sources — enrolled beneficiary premiums and the federal contributions from the Treasury — are automatically adjusted each year to cover costs for the upcoming year. Although the financing is assured, the rapidly rising SMI costs have been placing steadily increasing demands on beneficiaries and taxpayers.

The SMI Trust Fund provides the funding Medicare Part B and D. Part B, which covers physician visits, outpatient services, preventive services, and some home health visits, is financed primarily through a combination of general revenues (71% in 2023) and beneficiary premiums (27%) (and 1% from interest and other sources). Beneficiaries with annual incomes over $103,000 per individual or $206,000 per couple pay a higher, income-related Part B premium reflecting a larger share of total Part B spending, ranging from 35% to 85%. The standard monthly Part B premium in 2024 is $174.70, while the income-related monthly premiums range from $244.60 to $594. Part B premiums are paid by enrollees in both traditional Medicare and Medicare Advantage.

How Medicare Part D is funded. Part D, which covers outpatient prescription drugs is also funded by the SEMI Trust Fund and is financed primarily by general revenues (73%), with additional revenues coming from beneficiary premiums (14%) and state payments for beneficiaries enrolled in both Medicare and Medicaid (12%). Higher-income enrollees pay a larger share of the cost of Part D coverage.

Higher Spending ahead. Higher projected spending for benefits covered under Part B will increase the amount of general revenues and beneficiary premiums required to cover costs for Medicare Part B in the future. The Medicare trustees project that the standard monthly Part B premium will increase from $174.70 in 2024 to nearly $300 in 2033 accounting for 15% of the average retired worker’s Social Security benefit in 2033. 

• If you are in Medicare or Medicare Advantage you know that the standard monthly premium for Medicare Part B enrollees is $174.70 for 2024, an increase of $9.80 from $164.90 in 2023. (Income-Related Monthly Adjustment Amount (IRMAA) premiums range from $244.60 to $594.) Since 2014 the standard monthly premium for Medicare Part B has gone from $104.90 to the current $174.70. What impact does the Medicare Part B premium have on your livelihood?

The NRLN looks forward to reading your response to the above question and any other comments you may have on the SMI Trust Fund for Medicare Part B.