Hospital Insurance Trust Fund
A federal government program that pays for healthcare services during retirement
What is the Hospital Insurance Trust Fund?
The Hospital Insurance Trust Fund is a federal government program that finances healthcare services for people aged 65 years and older with a history of continuous Medicare contributions. It is also known as Medicare Part A.
The health insurance program pays for healthcare services, such as prolonged stays in hospitals, hospice, and skilled nursing facilities for the eligible beneficiaries. The program also pays for inpatient care, drugs administered during hospital stays, physical and occupational therapy at home, a semi-private room at nursing facilities, and doctor’s services.
The hospital insurance is mainly funded using tax money from payroll deductions on worker’s income and employer contribution, and taxes on social security benefits. Other revenue sources include transfers from the general fund, interest incomes on trust fund balances, and transfers from the Railroad Retirement Account.
The fund is designed to be a program that every employee contributes to and benefits from paid health care services at retirement or when they are unable to work due to a disability or certain health conditions. Due to the changes in demographics, work productivity, aging population, and other factors, it is projected that the trust fund can only pay full benefits to beneficiaries until 2026 before it is depleted.
Summary
- The Hospital Insurance Trust Fund is a federal government program that pays for healthcare services during retirement.
- The program covers people who are 65 years and older, people with disabilities, and people with certain conditions such as Amyotrophic Lateral Sclerosis (ALS) and end-stage renal disease.
- The Hospital Insurance Trust Fund is managed by a board of trustees that is required to make an annual report on its financial status to the U.S. Congress.
Hospital Insurance Trust Fund Explained
The Hospital Insurance Trust Fund is managed by a board of trustees that submits an annual report to the U.S. Congress on its financial status. The trust fund does not operate as an actual trust fund with money inflows and outflows. Instead, it is an accounting mechanism that the government uses to track government securities that support the program.
Workers who paid Medicare contributions during their working years or whose spouse made such contributions are not required to pay Medicare Part A premiums once they are 65 years and older. Usually, workers pay 1.45% of their gross pay in Medicare taxes, and the employer matches the contribution.
Workers who’ve reached 65 years of age and did not pay Medicare taxes during their working years must pay Medicare premiums every month. As of 2020, beneficiaries without a history of paying Medicare taxes may be required to pay upwards of $458 in premiums every month.
The hospital insurance trust fund’s beneficiaries are still required to pay deductibles for inpatient stays, which currently stand at $1,408 as of 2020.
Enrolling for the Hospital Insurance Trust Fund
Most workers are automatically enrolled in the healthcare program when they qualify, while others need to sign up directly to the program. Workers who meet the following conditions are automatically enrolled in the program:
- Workers who’ve received social security benefits for 2 years (at least 24 months)
- Workers who received disability benefits because they’ve been diagnosed with Amyotrophic Lateral Sclerosis (ALS) disease
- Workers with end-stage renal disease (ESRD)
If a worker is not automatically enrolled in the hospital insurance trust fund and he/she is eligible when they turn 65 years, they can sign up for the benefit during the initial 7-month enrollment period of their social security. The period is calculated by taking the three months before turning 65 years, the year when they turn 65 years, and three months after turning 65.
Workers can sign up through social security either by visiting the Social Security office, by phone, or by filing an online form.
Hospital Insurance Trust Fund Coverage
The trust fund covers healthcare services, such as hospice care, inpatient care at a nursing home, inpatient stays at a hospital, etc. The insurance program pays for the cost of drugs, inpatient care supplies, and physical and occupational therapy for home-bound patients.
However, the insurance fund does not cover all hospital-related services. When a specific service is not covered, hospital providers require patients to sign a notice before treatment is administered. The notice allows patients to decide whether to refuse the service or accept the treatment and pay for the service out-of-pocket.
Before using the hospital insurance trust program, it is important to determine if the insurance will cover the entire cost, part of it, or none of the associated healthcare costs. In certain cases, a patient can file an appeal with the insurer to get the decision to exclude a certain healthcare service from coverage receded. The hospital insurance trust fund may exclude certain services due to federal and state laws and specific federal laws on what Medicare Part A covers.
More Resources
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