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FICA/Medicare Taxes

Discussion in 'Money Talk$' started by Gina B, Dec 30, 2013.

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  1. Gina B

    Gina B Active Member

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    I'm a little old to be asking this, but I've not been able to find the answer to it despite looking in a lot of places and never really was that interested before.

    Why are both taken out separate on paychecks? I thought FICA paid for both social security and Medicare, so why take Medicare out twice? Is the one that is take out purely for Medicare supposed to count towards a person's own Medicare payments, while the money in FICA goes towards everyone?
     
    #1 Gina B, Dec 30, 2013
  2. SaggyWoman

    SaggyWoman Active Member

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    Fica is Social Security. Medi is medicare. Different. Too much.
     
    #2 SaggyWoman, Dec 30, 2013
  3. InTheLight

    InTheLight Well-Known Member
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    What do you mean by "Medicare is taken out twice?"

    There are two components to FICA and Medicare, the employer contribution and the employees contribution. FICA is 6.2% of gross pay and Medicare is 1.45%. Combined amount is 7.65%. You have 7.65% withheld from your paycheck which gets paid to the government and your employer pays 7.65% to the government.

    Both FICA and Medicare dollars go into a general fund. There is no direct account where each persons withholding gets placed into.
     
    #3 InTheLight, Dec 30, 2013
  4. Gina B

    Gina B Active Member

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    I'm saying twice because FICA is said to be something that pays for both Social Security AND Medicare.

    It does equal 7.65%

    Maybe I'm just confused by the wording used. When talking about this tax, they say "the medicare portion of the FICA tax..." which leads me to believe that FICA is one tax that pays for SS and Medicare, and the Medicare tax listed under it is a separate tax apart from FICA. If it's the same tax, they could indent it under FICA to show it's part of it and not different.
     
    #4 Gina B, Dec 30, 2013
  5. Zenas

    Zenas Active Member

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    In the old days the two were lumped together into one tax called FICA. There was an upper limit of wages, above which there was no FICA tax. I don't recall what that was but probably around $75,000. Any money made above that upper limit was not subject to FICA tax. Then about 1990, give or take five years or so, they separated Social Security and Medicare payroll taxes. Today, there is still an upper limit on the amount of earnings subject to Social Security tax. It is presently $113,700. However, no such upper limit exists for Medicare. If you made $1,000,000 per year all of it would be subject to the Medicare tax. And that is why they are witheld separately.
     
    #5 Zenas, Dec 30, 2013
  6. Gina B

    Gina B Active Member

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    Thank you Zenas! I get it now. They sure don't make that information easy to find online.

    While I was searching, I ran across info that they already raised Medicare taxes for those above a certain income level to help pay for the ACA. I had thought they held off on doing that. It will certainly make a mess of things if it were to end up being repealed. http://www.irs.gov/Businesses/Small...s-and-Answers-for-the-Additional-Medicare-Tax
     
    #6 Gina B, Dec 30, 2013
  7. SaggyWoman

    SaggyWoman Active Member

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    I forget that they list things differently sometimes......back in the day.
     
    #7 SaggyWoman, Jan 1, 2014
  8. OldRegular

    OldRegular Well-Known Member

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    If I am correct when Medicare was first enacted there was no distinction between the Social Security Component and the Medicare component. That distinction was made some years later and I don't recall when!
     
    #8 OldRegular, Jan 21, 2014
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