The trustees overseeing Medicare’s financial operations have recently announced positive news for the second consecutive year regarding the fund responsible for covering hospital care expenses for its 65 million beneficiaries. According to the latest report, which was published on March 31, the fund’s financial outlook has improved to such an extent that it is now projected to maintain its solvency until 2031, a three-year extension compared to previous estimations.

This development provides relief and confidence, indicating that Medicare’s financial stability is heading in the right direction. Even if the fund eventually faces a shortage of funds by 2031, it is important to note that it would still be able to cover an impressive 89% of the total Medicare costs through the revenue generated by incoming taxes.

These findings reflect the ongoing efforts and effective management strategies the team responsible for Medicare’s financial planning implemented. Their diligent work has ensured that the fund’s financial health is on track, allowing it to support a significant portion of the healthcare expenses incurred by Medicare beneficiaries.

What changes created a positive outlook for Medicare solvency?

The Medicare hospital fund is doing better because there has been less spending on healthcare and more money is being put into the fund. This is happening because more people are working and getting higher wages. The HI trust fund, which helps fund the hospital fund, is mostly paid for through the Medicare payroll tax.

During a call with reporters on March 31, officials from the government explained that healthcare spending is expected to decrease for several reasons. One of these reasons is that many elderly people being treated for serious illnesses and utilizing more healthcare resources, unfortunately, passed away due to the COVID-19 pandemic

The surviving beneficiaries enrolled in the Medicare program have fewer additional health problems, contributing to decreased spending. Additionally, more Medicare recipients on Medicaid have been enrolling in Medicare Advantage plans, saving money for the program. Lastly, Medicare patients receive more procedures, such as joint replacements, in outpatient settings instead of inpatient settings, saving the hospital trust fund money.

According to the trustees, a new law has been passed that will result in lower prices for prescription drugs and improve the program’s financial status. The Inflation Reduction Act of 2022 has significantly impacted the projections of Medicare. 

The new law contains various healthcare provisions that will help control the growth of prescription drug prices, such as allowing Medicare to negotiate the price of some drugs and imposing penalties on drug companies that increase prices beyond the inflation rate. The Part D prescription drug plan will also change, including implementing a $2,000 limit on out-of-pocket costs. These changes will help save money for the program.

Projected Medicare Part B increase for 2024

The trustees responsible for overseeing Medicare have provided a projection that brings attention to the anticipated cost increase for Medicare Part B, which covers doctor visits and various medical services. The monthly premium for Part B in 2024 is estimated to rise to $174.80, representing a $9.90 increase from the cost of $164.90 per month in 2023. It is important to note that the final premium for 2024 will be determined in the fall after careful consideration of various factors.

The decision on the final premium for 2024 will be based on a thorough evaluation of multiple factors, such as projected healthcare expenditure, inflation rates, and the overall financial health of Medicare. In collaboration with policymakers, the trustees will carefully assess the potential impact on beneficiaries while striving to balance affordability and the program’s long-term stability.

What trust funds impact Medicare solvency

Medicare, the vital federal health insurance program serving millions of Americans, relies on trust funds to ensure its financial stability and the provision of quality healthcare services. These trust funds, namely the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund, form the backbone of Medicare’s financing structure. 

The HI Trust Fund covers hospital care for beneficiaries, and the SMI Trust Fund, which encompasses physician visits and other medical services, works in tandem to support the program’s operations. Understanding the role and status of these trust funds is crucial in assessing Medicare’s long-term sustainability and effectiveness in meeting the healthcare needs of an aging population.

Medicare Part A (HI) trust fund

The HI trust fund pays for hospital care, hospice, nursing facility care, and home health services for Medicare patients. Payroll taxes primarily fund the HI trust fund. Payroll taxes can change by the number of workers and their wages. Due to a faster economic recovery than expected in 2022, there was a 16.6% increase in projected HI payroll tax income from the previous year.

The expenses of HI were not as high as predicted due to COVID-19, which made it difficult to estimate accurately. The previous report expected increased service demand because of the pandemic, but that didn’t happen. Even though there were some improvements, overpayments in Medicare Advantage still lead to higher Medicare costs and reduced funds in the HI trust.

Medicare Part B (SMI) trust fund

The report discusses how the Supplemental Medical Insurance (SMI) trust fund works. This fund helps pay for Part B and some of Part D. 

Every year, the amount of money coming in from premiums and general revenue changes based on expectations. Even though the SMI trust fund pays for more Medicare expenses, it doesn’t face the same funding problems as the HI trust fund. 

The people who wrote the report think that changes to prescription drug rules will help lower some of the SMI spending for Part B and Part D. They also predict that changes to drug prices will help lower future program costs.

How can Congress help with Medicare solvency?

Although there are positive predictions for the Medicare trust fund in the near future, the trustees warn that Congress needs to take action to strengthen the program’s finances in the long run. The report reveals that the fund will begin to experience a shortage in less than ten years.

According to the report, Medicare faces significant financial difficulties and requires major changes. The projections suggest that Medicare will face a large financial shortfall, which new legislation can only solve. Congress must act quickly to reduce the negative impact on beneficiaries, providers, and taxpayers is important.


What’s the future solvency of Medicare?

Without significant changes, the current trajectory of Medicare’s financial situation paints a concerning picture. The projections indicate the potential exhaustion of funds by 2031. Similarly, the Social Security Trust Funds, responsible for providing old-age and disability benefits, face depletion by 2034. Unless congress takes substantial action.

What happens when the Medicare trust funds run out of money?

If Medicare loses its solvency completely, the program could only pay Part A services based on the available tax revenues. Regrettably, these revenues would prove insufficient to fully cover the costs of providing comprehensive healthcare services. Such a scenario underscores the importance of maintaining a robust and sustainable funding structure for Medicare. This allows the program to ensure that beneficiaries receive the necessary medical care without compromising the program’s financial integrity.

Who protects the Medicare trust funds?

Medicare’s solvency relies on two dedicated trust fund accounts held by the U.S. Treasury. These funds are solely for Medicare purposes. In addition, they safeguard the availability of healthcare services for its beneficiaries. This dedicated funding mechanism reinforces the commitment to protect and prioritize the resources required to sustain Medicare. As well as its critical role in providing accessible and comprehensive healthcare coverage for millions of individuals.

What are the two Medicare trust funds?

Two distinct funds are vital in ensuring the program’s financial stability. The first is the Hospital Insurance Trust Fund. Its primary funds come through payroll taxes on earnings and income taxes. 

The second fund is the Supplemental Medical Insurance Trust Fund. It derives its finances from a combination of general tax revenue and the premiums paid by program enrollees. 

What is the projected Medicare Part B premium for 2024?

According to the trustees that control Medicare funding, the projected cost of Medicare Part B in 2024 will be $174.80. This isn’t the final number and is subject to change.

Medicare is in a good place for the next several years. However, changes must be made to ensure the funding continues. Review Medicare options in your area with us by filling out our online request form. 

Methodology: extracted and analyzed data from the following to provide data in this article.

  • “2023 Medicare Trustees Report” (
  • “Fact Sheet: The Presidents Budget: Extending Medicare Solvenct by 25 years” (
  • “Fact Sheet: 2023 Social Security and Medicare Trustees Reports” (US Treasury)

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Lindsay Malzone, Lindsay Malzone is the Medicare editor for She's been contributing to many well-known publications since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.
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Rodolfo Marrero, Rodolfo Marrero is one of the co-founders at He has been helping consumers find the right coverage since the site was founded in 2013. Rodolfo is a licensed insurance agent that works hand-in-hand with the team to ensure the accuracy of the content.