Medicare is a federally funded health insurance program designed to assist specific groups of Americans with healthcare costs. It primarily serves individuals aged 65 and older, as well as certain younger people with disabilities or those with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant).
A Breakdown of Medicare Coverage
Medicare is divided into multiple components, each addressing different aspects of medical care:
- Part A: Covers inpatient care, such as hospital stays, skilled nursing facility care, and limited home healthcare.
- Part B: Helps with outpatient services like doctor visits, preventive care, lab work, and medical supplies.
- Part D: Offers prescription drug coverage, including medications, certain vaccines, and recommended immunizations.
These components allow individuals to select the type of coverage most suited to their medical needs.
How Medicare Is Funded
Medicare is financed in part through payroll taxes under the Federal Insurance Contributions Act (FICA). Employers are responsible for withholding 1.45% of an employee’s gross wages for Medicare taxes. This deduction is mandatory and is taken alongside Social Security contributions.
What Medicare Does and Doesn’t Cover
In addition to hospital stays and outpatient care, Medicare may cover:
- Hospice services
- Diagnostic lab work
- Durable medical equipment (e.g., wheelchairs, oxygen tanks)
However, not all services fall under Medicare’s scope. The program typically does not pay for:
- Cosmetic procedures (like plastic surgery)
- Acupuncture treatments
- Dental prosthetics such as dentures
Simplifying Medicare Tax Management with Beyond
Tools like Beyond make it easier for employers to manage Medicare-related payroll deductions, stay compliant with FICA rules, and handle reporting requirements. Beyond helps streamline payroll processes while reducing the risk of errors that could lead to penalties.