What is Medicare?

Medicare is the federal health insurance program for people 65 and older, and for some younger individuals with disabilities. It primarily covers individuals aged 65 and older, as well as younger people with designated disabilities, End-Stage Renal Disease (ESRD), or Amyotrophic Lateral Sclerosis (ALS).

Medicare is structured in four distinct parts: Part A (Hospital Insurance, covering inpatient stays, hospice, and skilled nursing), Part B (Medical Insurance, covering outpatient care, doctor visits, and preventative services), Part C (Medicare Advantage, allowing private insurers to deliver Part A and B benefits), and Part D (Prescription Drug coverage). Most individuals qualify for premium-free Part A if they or their spouse paid Medicare taxes for at least 10 years (40 credits).

Medicare is funded by a 1.45% payroll tax on both employees and employers. High earners are subject to the <a href="/articles/high-income-fica-additional-medicare-niit-math" class="text-blue-600 dark:text-blue-400 hover:text-blue-700 dark:hover:text-blue-300 hover:underline font-semibold transition-colors duration-200">Additional Medicare Tax</a> of 0.9% under the Affordable Care Act (ACA) on earnings exceeding $200,000 for single filers or $250,000 for married couples filing jointly. Part B and Part D premiums are adjusted based on income through the Income-Related Monthly Adjustment Amount (IRMAA).