Given the current pattern of spending growth, maintaining Medicare's financing over the long-term may well require significant changes.According to the 2008 report by the board of trustees for Medicare and Social Security, Medicare will spend more than it brings in from taxes this year (2008). The Medicare hospital insurance trust fund will become insolvent by 2019. Shortly after the release of the report, the Chief Actuary testified that the insolvency of the system could be pushed back by 18 months if Medicare Advantage plans were paid at the same rate as the traditional fee-for-service program. He also testified that the 10-year cost of Medicare drug benefit is 37% lower than originally projected in 2003, and 17% percent lower than last year's projections. EligibilityIn general, individuals are eligible for Medicare if they are a U.S. citizen or have been a permanent legal resident for 5 continuous years, and they are 65 years or older, or they are under 65, disabled and have been receiving either Social Security or the Railroad Retirement Board disability benefits for at least 24 months, or they get continuing dialysis for permanent kidney failure or need a kidney transplant, or they have Amyotrophic Lateral Sclerosis (ALS-Lou Gehrig's disease).

Many beneficiaries are dual-eligible. This means they qualify for both Medicare and Medicaid. In some states for those making below a certain income, Medicaid will pay the beneficiaries' Part B premium for them (most beneficiaries have worked long enough and have no Part A premium), and also pay any drugs that are not covered by Part D.In 2007, Medicare provided health care coverage for 43 million Americans. Enrollment is expected to reach 77 million by 2031, when the baby boom generation is fully enrolled. Benefits A Medicare card, with several areas of the card obscured to protect privacy.There are separate lines with for Part A and Part B, each with its own date.There is no lines for Part C or D, as a separate card is issued for those benefits by the private insurance company.The "Original Medicare" program has two parts: Part A (Hospital Insurance), and Part B (Medical Insurance). Only a few special cases exist where prescription drugs are covered by Original Medicare, but as of January 2006, Medicare Part D provides more comprehensive drug coverage.

Medicare Advantage plans are another way for beneficiaries to receive their Part A, B and D benefits. Part A: Hospital InsurancePart A covers hospital stays (including stays in a skilled nursing facility) if certain criteria are met:The hospital stay must be at least three days, three midnights, not counting the discharge date. The nursing home stay must be for something diagnosed during the hospital stay or for the main cause of hospital stay. For instance, hospital stay for broken hip and then nursing home stay for physical therapy would be covered. If the patient is not receiving rehabilitation but has some other ailment that requires skilled nursing supervision then the nursing home stay would be covered. The care being rendered by the nursing home must be skilled. Medicare part A does not pay for custodial, non-skilled, or long-term care activities, including activities of daily living (ADLs) such as personal hygiene, cooking, cleaning, etc. The maximum length of stay that Medicare Part A will cover in a skilled nursing facility per ailment is 100 days.

The first 20 days would be paid for in full by Medicare with the remaining 80 days requiring a co-payment (as of 2008, $128.00 per day). Many insurance companies have a provision for skilled nursing care in the policies they sell.

Medicare

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are either age 65 and over, or who meet other special criteria. It was originally signed into law on July 30, 1965, by President Lyndon B. Johnson as amendments to Social Security legislation. At the bill-signing ceremony President Johnson enrolled former President Harry S. Truman as the first Medicare beneficiary and presented him with the first Medicare card. AdministrationThe Centers for Medicare and Medicaid Services (CMS), a component of the Department of Health and Human Services (HHS), administers Medicare, Medicaid, the State Children's Health Insurance Program (SCHIP), and the Clinical Laboratory Improvement Amendments (CLIA). Along with the Departments of Labor and Treasury, CMS also implements the insurance reform provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The Social Security Administration is responsible for determining Medicare eligibility and processing premium payments for the Medicare program.

The Chief Actuary of CMS is responsible for providing accounting information and cost-projections to the Medicare Board of Trustees in order to assist them in assessing the financial health of the program. The Board is required by law to issue annual reports on the financial status of the Medicare Trust Funds, and those reports are required to contain a statement of actuarial opinion by the Chief Actuary.Since the beginning of the Medicare program, CMS has contracted with private companies to assist with administration. These contractors are commonly already in the insurance or health care area. Contracted processes include claims and payment processing, call center services, clinician enrollment, and fraud investigation. Taxes imposed to finance MedicareMedicare is partially financed by payroll taxes imposed by the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act of 1954. In the case of employees, the tax is equal to 2.9% (1.45% withheld from the worker and a matching 1.45% paid by the employer) of the wages, salaries and other compensation in connection with employment.

Until December 31, 1993, the law provided a maximum amount of wages, etc., on which the Medicare tax could be imposed each year. Beginning January 1, 1994, the compensation limit was removed. In the case of self-employed individuals, the tax is 2.9% of net earnings from self-employment, and the entire amount is paid by the self-employed individual. CostAccording to the 2004 "Green Book" of the House Ways and Means Committee, Medicare expenditures from the American government were $256.8 billion in fiscal year 2002. Beneficiary premiums are highly subsidized, and net outlays for the program, accounting for the premiums paid by subscribers, were $230.9 billion.Medicare spending is growing steadily in both absolute terms and as a percentage of the federal budget. Total Medicare spending reached $440 billion for fiscal year 2007, or 16 percent of all federal spending. The only larger categories of federal spending are Social Security and defense.