There are many different types of Social Security and Medicare benefits and all are funded through an array of sources. Funding of Social Security benefits is usually a popular topic as some people claim the current level of funding will not sustain the programs for more than the next 15 years, so it is important to look at how all of the programs are funded.
How Are Social Security Benefits Funded?
To pay for Retirement, Survivors, Disability Insurance, and Hospital Insurance Benefits, taxes are collected from employers, employees, and the self-employed who are working in jobs and businesses covered by Social Security.
How Are SSI Payments Funded?
SSI payments are paid from the general revenues of the U.S. and in States which supplement the Federal benefits from State funds.
How are hospital insurance benefits funded?
Hospital Insurance Benefits are either paid from the FICA/SECA taxes or by monthly premium payments. Funding depends on the circumstances of eligibility.
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. 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 are required to pay a higher percentage of their total Part B premium costs. Increases in Part B premiums for these individuals were phased in from 2007 to 2009.
How are prescription drug benefits funded?
Prescription drug benefits are funded by general revenues of the U.S., monthly beneficiary premiums, and state payments.
Where are money gifts to Social Security deposited?
Unconditional money gifts to Social Security may be accepted and deposited in whatever Social Security trust fund is designated by the donor. If no specific fund is designated, the gift is deposited in the Federal Old-Age and Survivors Insurance Trust Fund.
