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The factors contributing to this include a growing number of older Americans, longer life expectancy, fewer younger workers contributing to Medicare and expensive new medications. The Congressional Budget Office estimates that by 2032, Medicare will spend $1.9 trillion, twice the defense budget. Various solutions are proposed to address these solvency issues:

📌 Raise Medicare payroll taxes: President Biden's 2024 budget suggests increasing the Medicare tax rate on income above $400,000. Some Democrats support this, but it faces resistance from Republicans who are generally averse to tax hikes.

📌 Raise the Medicare enrollment age: Some Republicans propose gradually raising the eligibility age from 65 to 67 or even 70. However, critics argue this could increase overall healthcare spending and leave some without insurance.

📌 Premium support system: This involves moving to a premium support system to enhance competition among health plans and reduce costs.

📌 Medicare Advantage payment reforms: Reforms in the payment model for Medicare Advantage plans are proposed as a bipartisan solution to save government money while improving care for beneficiaries.

Before you begin worrying about your Medicare coverage, know that the 2031 insolvency forecast refers specifically to Medicare Part A, while other parts of Medicare are financed differently. Further, more likely than not, a solution to continue funding Part A care will be reached prior to the deadline. However, if you feel the healthcare portion of your retirement plan needs a check-up in the meantime, don’t hesitate to reach out.