Maryland Life and Health Insurance License Practice Exam

Funding for Medicare Part B is partially provided by which of the following?

1. Federal taxes

2. State taxes

3. User premiums

4. Employer contributions

The correct answer is: User premiums

Funding for Medicare Part B is primarily sourced from two areas: federal taxes and user premiums. In this context, user premiums refer to the monthly payments that individuals enrolled in Medicare Part B make in order to receive coverage for outpatient care, preventive services, and various other health-related services. The correct understanding is that these user premiums are an essential part of the funding mechanism for Medicare Part B, as they help offset some of the costs incurred by the program. While there are also federal tax contributions that help fund the program, the specific focus of the question is on the direct contributions from individuals who utilize Part B services. In contrast, state taxes and employer contributions play lesser roles in the direct funding of Medicare Part B. State taxes generally fund state-run health programs rather than federal Medicare. Similarly, while employers do contribute to Medicare through payroll taxes, this funding primarily supports Medicare Part A, which covers hospital insurance, rather than Part B. Therefore, user premiums provide a clear and direct financial source that supports the operational costs of Medicare Part B.