Module 1
How Medicare Is Built
Medicare covers 68 million people through four parts and two trust funds financed in very different ways. The structure everything else depends on.
By the end of this module, you will be able to:
- Identify who is eligible for Medicare and what each of the four parts covers
- Explain why the Part A trust fund can be depleted while Parts B and D cannot
- Distinguish traditional Medicare from Medicare Advantage as two routes to one entitlement
- What Medicare Covers Medicare covers 68 million people through four parts that each work differently. This lesson maps the structure everything else depends on. About 5 min
- How Medicare Is Financed Part A runs on a payroll tax and a trust fund that can run dry. Parts B and D run on general revenue and cannot. The difference drives the politics. About 5 min
- Two Ways to Receive Medicare The same entitlement reaches beneficiaries through two very different systems. This lesson sets up the comparison the rest of the course depends on. About 4 min
Module quiz
Answer all questions to see your score.
1. What does Part B cover?
Part A covers inpatient hospital, skilled nursing, hospice, and home health. Part B covers physician and outpatient services, and Part D covers outpatient drugs.
2. How is Part A financed?
Payroll taxes supplied 88 percent of Part A revenue in 2024. Because the rate is fixed in statute while spending grows, the trust fund can be drawn down.
3. Which protection exists in Medicare Advantage but not in traditional Medicare?
Traditional Medicare has no out-of-pocket limit, while virtually all Medicare Advantage plans include one. That gap is why most people in traditional Medicare carry supplemental coverage.