AD Banker Comprehensive Practice Exam

What is the primary source of support for Medicare Part A?

1. Local tax revenues

2. Federal bond fund

3. Medicaid

4. Social Security payroll taxes

The correct answer is: Social Security payroll taxes

The primary source of support for Medicare Part A comes from Social Security payroll taxes. These taxes are collected from employees and employers and are specifically designated to fund Medicare. When a worker earns wages, a portion is deducted as a payroll tax, and this contributes to the Medicare trust fund. This funding mechanism is crucial because it ensures that Medicare Part A, which provides hospital insurance and covers inpatient care, is financially supported by a steady stream of revenue directly linked to the earnings of workers. Other sources mentioned do not play a significant role in supporting Medicare Part A. Local tax revenues do not fund Medicare, as it is a federal program primarily supported by federal funds. Federal bond funds generally pertain to financing government projects, rather than being a direct source of revenue for Medicare. Medicaid operates as a different program designed to assist low-income individuals and families and does not provide direct funding for Medicare. Understanding the essential role of Social Security payroll taxes in funding Medicare Part A helps clarify how this program is sustained over time.