HI 00201.025 Financing the Hospital Insurance Program

The Hospital Insurance program is financed through payroll contributions paid by employees, employers, and self-employed persons. The cost of providing hospital insurance benefits to persons who meet the deemed insured requirements is met by appropriations to the Federal Hospital Insurance Trust Fund from general revenues. Individuals enrolled in the Premium-HI program pay a monthly rate.

A. Contribution rate

The contribution rate for employees, their employers, and the self-employed, is .90 percent of covered earnings through 1977. It then increases gradually reaching a maximum of 1.45 percent in 1986 and subsequent years. These amounts are added to, and are paid at the same time as the other social security contribution rates (FICA).

B. Federal Hospital Insurance Trust Fund

The contributions collected become part of a trust fund from which all Part A payments are made. This fund is administered by a Board of Trustees consisting of the Secretary of the Treasury (who is the Managing Trustee), the Secretary of Labor, and the Secretary of Health and Human Services all ex-officio. The Managing Trustee is authorized to invest trust funds only in interest-bearing obligations of the United States, or in obligations guaranteed as to both principal and interest by the United States not need for current withdrawals, and to make payments from the fund for purposes of Part A, including administrative expenses.

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HI 00201.025 - Financing the Hospital Insurance Program - 09/11/2003
Batch run: 04/07/2015