2026 Medicare Trustees Report Highlights Financial Challenge

Overview of Medicare Trust Funds and Their Functions

The Medicare program is fundamentally supported by two distinct trust funds: the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. The HI Trust Fund, commonly referred to as Medicare Part A, is primarily designed to cover inpatient hospital services, hospice care, skilled nursing facility care, and certain home health services following hospital stays. This fund is financed through payroll taxes collected from workers and their employers, which are deposited into the HI Trust Fund to pay for the benefits provided to eligible beneficiaries.

In contrast, the SMI Trust Fund encompasses Medicare Part B and Part D. Part B covers outpatient services, physician visits, and preventive care, while Part D provides prescription drug coverage. Unlike the HI Trust Fund, the SMI Trust Fund is financed through a combination of beneficiary premiums and general revenue contributions from the federal government.

This structure allows for a more flexible…

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Based on the official release at https://www.govinfo.gov/app/details/CDOC-119hdoc164

Original government source · U.S. Government Publishing Office

THE 2026 ANNUAL REPORT OF THE BOARDS OF TRUSTEES OF THE FEDERAL HOSPITAL INSURANCE AND FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS

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https://www.govinfo.gov/app/details/CDOC-119hdoc164

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