There are two distinct funds through which Medicare is financed. Specifically, Part A is funded by the Hospital Insurance (HI) Trust Fund, which is comprised of revenue from payroll taxes, interest, taxation of Social Security benefits and other sources.
Part B is funded by the Supplementary Medical Insurance (SMI) Trust Fund, which is comprised of general revenue, beneficiary premiums, and interest.
Part D receives funding through general revenues, beneficiary premiums and payments from states.
In 2012, Medicare's total income amounted to $532.6 billion, while spending reached approximately $551 billion.
Medicare Spending and Financing offers more detailed information about Medicare’s spending history, growth and future financial challenges.