The Medicare Part A premium is the cost that would be assessed as if an individual never paid FICA-Med payroll taxes (most fund this by paying 40 quarters of FICA-Med taxes). The Part B premium is 4 times the amount most pay for Medicare Part B (our premium is set at ~25% of the estimated cost of coverage - the rest is paid by taxpayers as part of general revenue ... mostly income taxes). Part D is funded much the same as Part B (our premium is set at ~25% of the estimated cost of coverage, the rest is paid by taxpayers as part of general revenue). The AARP quote for a "F" plan was off of their website. This stuff ain't cheap. As mentioned in my post, the financial burden is allocated to three groups:
(1) Those paying FICA-Med taxes (1.45% paid by the individual, 1.45% paid by their employer (often in the form of reduced wages to the worker),
(2) The current beneficiaries paying their monthly premiums for Part B and Part D coverage (except for the dual eligibles, where those costs are paid by taxpayers), while some beneficiaries pay IRMAA surcharges, and
(3) The 53% or so of American households who pay income taxes. In 2026 (or earlier), we will likely see a change in the allocation once the HI trust fund is exhausted. For Social Security, the financial burden is allocated approximately 80% to current workers, and approximately 20% or so to those of us who built the trust fund with our taxes (which exceeded the benefits paid) over the period 1984 to today. Starting in 2020 (I think), the payments will exceed taxes and we have started to draw wodn Social Security trust monies (almost $3 Trillion in assets). That draw down will accelerate as more Baby Boomers age into retirement. Trust assets are expected to be exhausted in the early 2030's. Without change, payroll taxes are approximately enough to pay about 75% - 80% of the promised benefit.
Comments
The Medicare Part A premium is the cost that would be assessed as if an individual never paid FICA-Med payroll taxes (most fund this by paying 40 quarters of FICA-Med taxes). The Part B premium is 4 times the amount most pay for Medicare Part B (our premium is set at ~25% of the estimated cost of coverage - the rest is paid by taxpayers as part of general revenue ... mostly income taxes). Part D is funded much the same as Part B (our premium is set at ~25% of the estimated cost of coverage, the rest is paid by taxpayers as part of general revenue). The AARP quote for a "F" plan was off of their website. This stuff ain't cheap. As mentioned in my post, the financial burden is allocated to three groups: (1) Those paying FICA-Med taxes (1.45% paid by the individual, 1.45% paid by their employer (often in the form of reduced wages to the worker), (2) The current beneficiaries paying their monthly premiums for Part B and Part D coverage (except for the dual eligibles, where those costs are paid by taxpayers), while some beneficiaries pay IRMAA surcharges, and (3) The 53% or so of American households who pay income taxes. In 2026 (or earlier), we will likely see a change in the allocation once the HI trust fund is exhausted. For Social Security, the financial burden is allocated approximately 80% to current workers, and approximately 20% or so to those of us who built the trust fund with our taxes (which exceeded the benefits paid) over the period 1984 to today. Starting in 2020 (I think), the payments will exceed taxes and we have started to draw wodn Social Security trust monies (almost $3 Trillion in assets). That draw down will accelerate as more Baby Boomers age into retirement. Trust assets are expected to be exhausted in the early 2030's. Without change, payroll taxes are approximately enough to pay about 75% - 80% of the promised benefit.
Post: Too Generous Yet Not
Link to comment from July 26, 2021