Some experts are worried that Medicare could become insolvent sooner than later as COVID-19 has resulted in less payroll taxes, more beneficiaries, and congress dipping into Medicare reserves for relief.
Trustees for Medicare’s Part A trust fund project it will run out of money in 2026. While this has been the projection since last year, COVID-19 has exacerbated those fears. The trust is funded by a 1.45% payroll tax and is used to pay for hospitalization and inperson care.
Most of those who watch Medicare finances agree that the larger problem right now is how much money is being collected for the trust fund. That money largely comes from the 1.45% payroll tax paid by employees and employers. With so many people out of work because of pandemic-related shutdowns, cash flowing in has dropped dramatically.
In addition to payroll issues, the article notes that at least $60 billion in CARES Act funding came from the Trust Fund.
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