MHI – Q: What are Medicare taxes?

Posted by MedEd at MHI
A: The Federal Insurance Contributions Act (FICA) authorizes two types of taxes to be deducted from your paycheck – Medicare taxes and Social Security taxes. Both types of taxes must be paid. You pay half and your employer pays the other half.

6.2 percent of your wages go to the Social Security Administration to fund retirement, survivor and disability benefits. Another 1.45 percent are Medicare payroll taxes. Your 1.45 percent of your wages for your Medicare taxes will be matched by your employer bringing your total Medicare payroll tax to 1.45 + 1.45 = 2.9 percent.

The federal government instituted an Additional Medicare tax in 2013 applying to wage earners with high incomes. Individuals with Medicare wages of $200,000 or more ($250,000 for married filing jointly) must pay an additional .9 percent of their wages.

Medicare Part A is funded by the Medicare portion of your FICA tax. If you or your spouse pay FICA taxes for at least ten years, you will not be charged a monthly premium for Part A once you start Medicare. If you or your spouse have paid FICA taxes for less than ten years, you will be charged a monthly premium for Part A.

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