Amendments to the Social Security Act enacted in 1965 established a broad program of health insurance, known popularly as Medicare, for people age 65 or older, including railroad workers and members of their families. Part A provides hospital insurance and related benefits financed through payroll taxes. Part B provides medical insurance benefits on a voluntary basis, with the cost shared by the participants and the Federal Government. Both parts of the program have been modified and liberalized several times since 1967, principally in the 1973 extension of coverage to persons under age 65 who are totally disabled or have permanent kidney failure. In 2003, legislation was enacted which provided prescription drug coverage for Medicare beneficiaries beginning in 2006, among other changes.
Persons covered by the railroad retirement system participate in Medicare on the same basis as those under the social security system. Amendments to the railroad retirement laws in 1965 and to the social security laws in 1972 gave the RRB an important role in the administration of the health insurance program and made possible the collection of hospital insurance taxes on the same basis as retirement taxes under the Railroad Retirement Tax Act. The 1965 amendments also empowered the RRB to make payments from the Railroad Retirement Account for hospital insurance services provided anywhere in Canada to persons receiving or qualified to receive railroad retirement benefits. Such payments apply only to the charges in excess of the amounts payable for hospital and related services under Canadian public health insurance laws.
Social security legislation in 1972 gave the RRB direct legislative authority to collect Medicare premiums from railroad retirement beneficiaries and to select a carrier to process medical insurance claims for all railroad retirement beneficiaries. Previously, authority in these areas had been delegated to the RRB by the Social Security Administration.