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Discuss Question 9

9. FISCAL KNOWLEDGE: Most individuals pay more in payroll taxes and Medicare premiums over their lifetime than they end up receiving in Social Security and Medicare benefits.

ANSWER: False – According to the Urban Institute, most people over their lifetime pay less in total payroll taxes and Medicare premiums compared to the amount of benefits they receive from Social Security & Medicare. Individuals pay payroll taxes over their working lives which funds the Social Security trust fund and the Hospital Insurance trust fund for Medicare. Individuals also contribute premiums if they participate in Medicare’s voluntary programs Parts B & D. Under reasonable assumptions, on average, people do not contribute enough over their lifetimes to account for the amount of benefits they receive from both Social Security and Medicare combined. However, the difference is much more significant for Medicare than Social Security, in part because a vast majority of Medicare beneficiaries only pay 25% of the cost of their benefit premium, with the remainder being subsidized by the government.

 

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