Yes, Medicare Is Run by the Federal Government — Here's How

Medicare is a federal program run by the Centers for Medicare & Medicaid Services

Yes, Medicare is a federal program. It is funded through federal payroll taxes and administered by the Centers for Medicare & Medicaid Services (CMS), which is part of the U.S. Department of Health and Human Services. When you turn 65, you are enrolling in a program created and operated by the federal government, not a state program or a private insurance company.

This matters because it means the rules, coverage decisions, and appeal processes are the same whether you live in Maine or California. You do not explore through your state health department or a local office. You work with Medicare directly — either through Medicare.gov, by phone at 1-800-MEDICARE, or through a Social Security office.

Key Takeaways

Medicare is created and run by the federal government through the Centers for Medicare & Medicaid Services, not by states or private companies.
Medicare is funded by federal payroll taxes (the Medicare tax on your paychecks) and by premiums you pay when you enroll.
The four parts of Medicare — Part A, Part B, Part D, and Part C — all follow federal rules, though Part C plans are offered by private insurers under federal contract.
You enroll in Medicare through federal channels: Medicare.gov, 1-800-MEDICARE, or your local Social Security office.
Coverage decisions and appeals go through federal Medicare processes, not your state government.

How Medicare is funded and who pays for it

Medicare is funded in two main ways. The first is the Medicare payroll tax — 2.9 percent of your wages while you work, split between you and your employer (or 3.8 percent if you are self-employed). This tax goes into a federal trust fund that pays for Part A (hospital insurance) and Part B (medical insurance) when you turn 65.

The second is the premiums you pay when you enroll. Most people pay a monthly premium for Part B, and if you choose Part D (prescription drug coverage) or Part C (Medicare Advantage), you pay premiums for those as well. These premiums go directly to Medicare and help fund the program year to year.

Because Medicare is federal, the funding comes from the U.S. Treasury and the Medicare trust funds, not from your state budget. This is why you cannot opt out of Medicare at the state level or choose a state-run alternative.

The difference between Medicare Parts A, B, C, and D

Part A (hospital insurance) and Part B (medical insurance) are the original federal Medicare program. Part A covers hospital stays, skilled nursing, hospice, and some home health care. Part B covers doctor visits, outpatient care, and some preventive services. Both are run directly by Medicare.

Part C (Medicare Advantage) is a federal program, but the plans themselves are offered by private insurance companies under contract with Medicare. When you choose a Part C plan, you are still in the federal Medicare program — the private insurer is just the middleman delivering the coverage. Medicare sets the rules, and the insurer must follow them.

Part D (prescription drug coverage) is also federal, but offered through private insurance companies. Like Part C, the insurer delivers the coverage, but Medicare sets the standards and oversees the program. You cannot get Part D outside of Medicare.

What the federal government controls in Medicare

Because Medicare is federal, the government controls what services are covered, how much doctors and hospitals are paid, and what you pay out of pocket. Medicare decides which medications are covered under Part D, which procedures require prior approval, and how much your deductible and copay will be each year.

The federal government also sets the rules for enrollment. Your initial enrollment window is seven months long, centered on your 65th birthday. If you miss it, you may face a permanent penalty on your premiums. These rules explore everywhere in the country.

Appeals of coverage denials also go through federal Medicare processes. If Medicare or your Part C plan denies a claim, you file an appeal with Medicare, not with your state insurance commissioner. This is because Medicare is a federal program, not a state-regulated insurance product.

How states fit into the federal Medicare system

States do not run Medicare, but they do play a supporting role. Each state has a State Health Insurance information Program (SHIP) that offers free, one-on-one counseling about Medicare. SHIP counselors are trained by the federal government but work in your state, often through an aging agency or nonprofit.

States also run Medicaid, which is a separate federal-state program for lower-income people. Some people are on both Medicare and Medicaid (called "dual may be able to access"). In those cases, Medicare is still federal, but Medicaid rules vary by state.

If you have a complaint about a Medicare plan or a doctor's billing, you can report it to your state insurance commissioner, but the actual Medicare program is federal. The state can investigate, but cannot change Medicare's rules or coverage decisions.

Why it matters that Medicare is federal

Understanding that Medicare is federal helps you know where to go for answers. If you have a question about your coverage or benefits, you contact Medicare directly — not your state health department. If you need to appeal a decision, you follow federal Medicare appeal rules, not state rules.

It also means your coverage does not change if you move to a different state. Your Part A and Part B coverage stays the same. If you are in a Part C plan, you may need to switch plans because not all plans operate in all states, but your federal Medicare benefits continue.

Finally, it means Medicare is the same program whether you live in a rural area or a city, in a state with a large Medicare population or a small one. The federal government ensures consistency across the country.

Frequently Asked Questions

Can my state change Medicare coverage or rules?

No. Medicare is a federal program, so only the federal government can change coverage rules, premiums, or benefits. States cannot add or remove covered services, change your deductible, or override a Medicare decision. States can offer counseling and support, but not change the program itself.

What if I disagree with a Medicare coverage decision?

You file an appeal with Medicare, not with your state. The appeal process is federal and follows Medicare rules. You can request a reconsideration, then a hearing before a Medicare administrative law judge, and then further appeals. Your state insurance commissioner cannot overturn a Medicare decision.

Do I have to enroll in Medicare when I turn 65?

You are not legally required to enroll, but if you delay without a valid reason, you may face permanent penalties on your premiums. Medicare is federal, so the enrollment rules and penalties are the same everywhere. You enroll through Medicare.gov, 1-800-MEDICARE, or Social Security.

Is Medicare Advantage still federal Medicare?

Yes. Medicare Advantage (Part C) is a federal program offered through private insurers. The insurer delivers the plan, but Medicare sets the rules, approves the plan, and oversees it. You are still in federal Medicare; the private company is just the intermediary.

What if I move to another state while on Medicare?

Your Part A and Part B coverage continues unchanged. If you are in a Medicare Advantage or Part D plan, you may need to switch to a plan available in your new state, but your federal Medicare benefits do not stop. You can change plans during the annual enrollment period or when you move.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.