“For SMI, transfers from the general fund of the Treasury represent the largest source of income. The transfers covered about 69 percent of program costs in 2023. Also, beneficiaries pay monthly premiums for Parts B and D; those premiums financed roughly 24 percent of the total cost in 2023. As with HI, the securities held in the SMI trust fund earn interest.”
Source: The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds, June 6, 2024.
“For HI [Hospital Insurance trust fund], the primary source of financing is the payroll tax on covered earnings. Employers and employees each pay 1.45 percent of a worker’s wages, while self-employed workers pay 2.9 percent of their net earnings. Starting in 2013, high-income workers pay an additional 0.9-percent tax on their earnings above an unindexed threshold ($200,000 for single taxpayers and $250,000 for married couples).
“Other HI revenue sources include a portion of the Federal income taxes that Social Security recipients with incomes above certain unindexed thresholds pay on their benefits, as well as interest earned on the securities held in the HI trust fund.”
Source: The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds, June 6, 2024.
“In 2023, HI income exceeded expenditures by $12.2 billion. The Trustees project that surpluses will continue through 2029, followed by deficits thereafter until the trust fund becomes depleted in 2036. The assets were $208.8 billion at the beginning of 2024, representing about 50 percent of expenditures projected for 2024, which is below the Trustees’ minimum recommended level of 100 percent. The HI trust fund has not met the Trustees’ formal test of short-range financial adequacy since 2003. Growth in HI expenditures has averaged 5.5 percent annually over the last 5 years, compared with non-interest income growth of 6.6 percent. Over the next 5 years, projected average annual growth rates for expenditures and non-interest income are 5.8 percent and 5.5 percent, respectively.
“The SMI trust fund is expected to be adequately financed over the next 10 years and beyond because income from premiums and government contributions for Parts B and D—which are contributions of the Federal Government that the law authorizes to be appropriated and transferred from the general fund of the Treasury—are reset each year to cover expected costs and ensure a reserve for Part B contingencies. The monthly Part B premium for 2024 is $174.70.
“Part B and Part D costs have averaged annual growth rates of 8.3 percent and 6.6 percent, respectively, over the last 5 years, as compared to growth of 5.8 percent for the Gross Domestic Product (GDP). The Trustees project that cost growth over the next 5 years will average 8.8 percent for Part B and 8.2 percent for Part D, faster than the projected average annual GDP growth rate of 4.3 percent over the period.
Source: The Boards of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, 2024 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds, June 6, 2024.
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World Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems and policies in the US and sixteen other nations.
Page last updated March 17, 2025 by Doug McVay, Editor.