“Entitled” to Medicare?

It has been 59 years since President Lyndon B. Johnson signed into law legislation establishing the Medicare and Medicaid programs. Some would say this was the beginning of “entitlement” in the United States of America.
One of the greatest enduring speeches of all time, John F. Kennedy said, “Ask not what your country can do for you—ask what you can do for your country” in his inaugural address on January 20, 1961.
According to CMS.Gov,
“Initial Enrollment Period (IEP) The IEP is a 7-month period that begins 3 months before the month a person turns 65, their birthday month and ends 3 months after the person turns 65. For someone under age 65 who becomes entitled to Medicare based on disability, entitlement begins with the 25th month of disability benefit entitlement. For these individuals, the IEP begins 3 months before the 25th month of disability benefit entitlement, includes the 25th month, and ends three months after.”
It has been 59 years since President Lyndon B. Johnson signed into law legislation establishing the Medicare and Medicaid programs. Some would say this was the beginning of “entitlement” in the United States of America. Shall we unpack this program that 77 million people are currently “entitled” to?
As explained on Investopedia.com:
  • “Medicare is funded by a payroll tax of 1.45% on the first $200,000 of an employee’s wages. Employees whose wages exceed $200,000 are also subject to a 0.9% Additional Medicare Tax on top of the 1.45%
  • Employers also pay a 1.45% tax on their employee’s wages. They do not pay the additional tax.
  • The Medicare tax for self-employed individuals is 2.9% to cover both the employee’s and employer’s portions.”
It shouldn’t take a rocket scientist to understand people who have higher incomes during their working careers will pay a lot more into this entitlement system. Libertarians love to stand on their soap boxes and proclaim how poorly the federal government mismanages taxes, but that is not what this article is about.
We are trying to just lay out the simple fact, high income earners in the United States pay a lot more in taxes than lower income earners for the same Original Medicare (Part A & B) benefits. High income earners pay a lot more in taxes to the trust funds of Medicare Part A, but they also get hit with an Income Related Monthly Adjustment Amount (IRMAA) when they enroll in Medicare Part B.

The Income-Related Monthly Adjustment Amount (IRMAA) was enacted in 2003 as part of the Medicare Modernization Act, and here is how it works in 2024:

Medicare beneficiaries are expected to receive $353,000 more in lifetime Medicare benefits than their total tax and premium payments. This is predicted to escalate to $498,000 for those who turn 65 in 2030.

The growing portion of Americans over 65 will further strain the program’s finances. The disparity between retired and working Americans is also decreasing, the ratio from 1980 through 2008 was around 4 to 1 and expected to be 2.5 in 2030. The Congressional Budget Office projects that roughly 14 million more people will be over the age of 65 by 2033. Medicare’s unsustainable future requires action from policymakers, but if everyone is being told they are “entitled” how that is going to be accomplished.

The real question we should be asking is why do people feel entitled to receive $353,000 more in lifetime Medicare benefits than their total tax and premium payments? And how do we sustain this a country?

If you need to go back to the basics, check out “Book of Medicare” filed with the Centers for Medicare and Medicaid Services under MULTIPLAN_PACIFIC_BOM_M.

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