Who primarily pays for Medicare?

Medicare is primarily funded through a system of taxes on employers and workers, making this the correct answer. The federal government collects payroll taxes under the Federal Insurance Contributions Act (FICA) from both employees and employers. These taxes go into the Medicare Trust Fund, which is specifically designated to pay for Medicare benefits.

Individuals contribute to this funding system throughout their working lives, which ensures that when they reach retirement age or become disabled, they have access to Medicare services. This framework allows for a broad base of funding, which is essential for covering the healthcare needs of seniors and certain disabled populations in the U.S.

Other options, while potentially related to healthcare financing, do not serve as the primary source of funding for Medicare. Taxpayer-funded donations and state government contributions are not the primary mechanisms for financing Medicare, as it relies heavily on dedicated payroll taxes. Out-of-pocket expenses from individuals are costs that beneficiaries incur for services, but these do not contribute to the funding of the Medicare program itself. Thus, understanding the foundational role of employer and worker taxes provides clarity on how Medicare is sustained financially.