In 1965, Congress enacted the Social Security Act, and established the Medicare tax as a way to care for the elderly in this country. In addition to the creation of Medicare, Medicaid was also established, and both operated under the Social Security Administration's supervision; The SSA was a division of the Health, Education and Welfare Department. Since that point in time, many changes to the tax, the administration of the program, and the eligibility of the recipients have seen much change. This article discusses some of the basic information about this tax, and what that means to the average citizen.

In 2001, the Health Care Financing Administration, or the HCFA was renamed to the Centers for Medicare and Medicaid Services or CMS; this is the administration that currently oversees the Medicare program. Medicare, as it exists today, is the national health insurance program for people age 65 or older, some persons with disabilities, and people with permanent kidney failure requiring dialysis or a kidney transplant.

The tax deducted from employees or wage earners paychecks each week is the monies used to fund this health insurance program, and everyone who earns wages must pay a certain percentage to the Medicare tax program.

Who is responsible for this tax? The employee and the employer pay a share of the tax, and each is an equal contribution. Since the inception of the Medicare tax, the rates of contribution have continued to increase, and the minimum wage earner typically bears the majority of the contribution responsibility.

What are the benefits associated with Medicare eligibility, once you've paid your tax and qualify for participation? Actually, the benefits are amazing, and needed by the vast majority of older Americans. Since medicine has managed to prolong the average person's life span, and we are now living longer than ever, Medicare benefits are needed now, more than ever. Until the beginning of 2006, Medicare covered your medical, surgical, and preventive maintenance needs. Beginning with 2006, however, prescription medicine will also be added to the coverage provided by Medicare. The benefits are many, for the individual willing to learn about the options offered.

The current Medicare system is divided into three parts: Medicare hospital insurance, Medicare medical insurance, and now prescription drug coverage. The Medicare hospital insurance is known as Medicare Part A, the medical insurance coverage is Part B, and Prescription Drug Coverage is simply known as that. The tax that has been deducted from payroll taxes each week over the course of your working life, covers the Medicare Part A, or hospital insurance; Medicare Part B, is available for a monthly premium fee, and now Prescription Drug coverage is going to be made available for all participants, at an additional premium fee.

Medicare Part B has several options available, and with the advent of the prescription drug coverage option, more of these options are being reviewed and discussed among the elderly of this country. What are the options available, and what do they mean for participants? Medicare now allows for covered participants to be enrolled as a part of the Original Medicare Plan, or in what is known as Medicare Advantage Plans that offer HMOs, PPOs, Private Fee-for-Service plans and other Medicare Health Plans, that offer more options still. Which option is the best choice? The answer to that question will depend upon individual circumstances, and the medical needs of the individual. The program as it exists today can be quite complicated, and many of our elderly citizens are struggling with the choices that are available, and how to pick and choose among programs they do not completely understand offered by a government that isn't offering a clear explanation of the choices available. While many of the services that Medicare is updating would actually benefit our older population, their choices in making information available to the older population and the confusion surrounding the programs has not been conducive to participation.

About the author:

Tony Robinson is a Webmaster and International Author. Visit http://www.tax-portal.com/ for his tax tips.