The Medicare hospital insurance (HI) portion of Medicare, also known as Part A, is largely funded by the 2.9 percent HI tax on earnings. Part A is compulsory insurance. Part B of the Medicare program, supplemental medical insurance (SMI), is financed by premiums paid by participants and by federal government funding.

Individuals who are at least age sixty-five and who are eligible for Social Security retirement benefits on their own behalf are entitled to coverage under Medicare Part A. If the individual has applied for Social Security retirement benefits, no separate application is required. If the individual continues to work after age sixty-five and is not receiving Social Security benefits, an application must be filed in order for the individual to receive Medicare Part A coverage. Recipients of disability benefits are eligible for Part A coverage after they have been eligible for disability benefits for twenty-four months.

Survivors and dependents of individuals who are entitled to Part A coverage must be atleast sixty-five years old to be eligible for Part A coverage. U.S. citizens who are not eligible for Part A coverage but who are enrolled in Part B may pay a monthly premium to enroll in Part A. Individuals are automatically enrolled for Part B coverage when they become eligible for Part A coverage. Part B coverage can be waived by completing the necessary forms. Any individual may enroll in Part B coverage if he or she is at least age sixty-five and has been a citizen or resident for five years.