Hospital Insurance Trust Fund

DEFINITION of 'Hospital Insurance Trust Fund'

This trust fund is part A of Medicare, the United States' health insurance program for people age 65 and older and certain disabled persons. It is financed through payroll taxes derived from current workers and employers. This trust fund is overseen by a board of trustees that report yearly to congress regarding its financial status. It has been projected to become insolvent a number of times throughout the years, due to legislative changes, and is currently projected to become insolvent in the year 2017.

BREAKING DOWN 'Hospital Insurance Trust Fund'

The main concern with this fund is that over time, the Nation's economy will not support this type of program. The actual trust fund is an account mechanism, since there is no transfer of money into or out of the fund. Income to the trust fund is credited in the form of interest-bearing government securities. Expenses for services and administrative costs are recorded against the fund. If the fund has a balance, the Treasury is allowed to make payments.

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