What is the source of Medicare tax funding?

The correct answer, which identifies employee wages and self-employment income as the source of Medicare tax funding, aligns with how the Medicare program is structured. Specifically, Medicare is primarily funded through a dedicated payroll tax imposed on earnings. This tax is collected both from employees' wages and self-employed individuals' income, ensuring that funds are directed specifically to support the Medicare program.

Employees contribute to Medicare through a specific percentage withheld from their paychecks, while self-employed individuals pay an equivalent amount through self-employment taxes. This direct link between employment income and funding for Medicare highlights the program's reliance on these specific income sources rather than general tax revenue or voluntary contributions.

Other funding sources mentioned, such as general tax revenue, government grants, and voluntary contributions, do not play a primary role in financing Medicare. Instead, they may support other government programs or initiatives. Understanding this direct connection to wages and self-employment income is crucial for grasping how Medicare operates financially.