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What Are Medicare Taxes and What To Do About Them

Written by Jason Patterson

Everyone knows the two things that you can’t avoid – death and taxes. It seems like every paycheck you get is being eaten alive by taxes. We all complain about them, but there are some benefits to those taxes being taken out. The first and most obvious is the premium-free Part A Medicare.

Unlike Medicare Part B, if you’ve been paying Medicare taxes for at least 10 years, you’ll be able to get Medicare Part A coverage without paying any premiums. See, all of those taxes you’ve been paying for years are starting to pay off.

Your Medicare taxes help fun the health care program. Sure, there are a lot of complaints and areas that the program falls short, but in the endmedicare taxes, it provide health care for millions of Americans that wouldn’t be able to afford it otherwise. These taxes are what makes the program possible. While they are taken out of every paycheck, very few people actually understand them. Because taxes are so important, it’s vital that you understand the taxes you’re paying, how much you should be paying, and why you’re paying them.

Today, with life expectancy being longer than it ever has been before, there are many people who are putting off retirement well past age 65. Working past the traditional retirement age is a recent trend that has created a lot of confusion about enrollment and paying Medicare taxes. Yet, although these individuals are still working, a large number have still chosen to have Medicare as their health care insurer. For a large majority of these working individuals, the W-2 income that they receive will have taxes automatically deducted – and from those deductions include Medicare taxes.

While many may wonder if these taxes will cease to be deducted from their payroll check once they turn age 65 and are enrolled in Medicare, the answer is that as long as you continue to work – regardless of whether you are receiving Medicare benefits – these taxes will be deducted from your earnings.

In fact, by law, the federal government requires that employers collect both Medicare and Social Security taxes from all of their employees, regardless of the employee’s age – with only one exception. That exception is for independent contractors who are required to pay such taxes on their own. (Independent contractors are required to pay both the “employer” and the “employee” portion of the tax).

It is also important to note that if you retire from the work force and then you return at a later time, you will be required to once again start paying Social Security and Medicare taxes when you re-enter the working world.

How Much Are Social Security and Medicare Taxes?

Social Security and Medicare taxes actually encompass the portion of the payroll tax deduction that is known as FICA. This stands for the Federal Insurance Contributions Act. Different tax rates apply for each of these taxes.

Currently, in 2014, the tax rate for Social Security is 6.2 percent for the employer, and another 6.2 percent for the employee. This equates to a total of 12.4 percent. (An independent contractor, then, would be required to pay a total of 12.4 percent – the 6.2 percent portion for the employer and the other 6.2 percent portion for the employee).

With regard to Medicare, the current 2014 payroll tax rate is 1.45 percent for the employer and 1.45 percent for the employee, for a total tax rate of 2.9 percent. While there is no wage base limit for the Medicare tax, there is for the Social Security tax. This means that all of a person’s covered wages will be subject to Medicare taxation.

For 2014, the wage base limit for Social Security taxation is $117,000. This means that an employee’s earnings of up to that amount will be taxed at the 6.2 percent tax rate. Wages that are earned above that amount, though, will not be taxed.

Starting in January 2013, there were some changes made to the way in which the Medicare tax was implemented. At that time, an additional amount of Medicare tax started being applied to a person’s Medicare wages that exceeded a threshold amount.

Here, the person’s employer is now responsible for withholding an additional 0.9 percent tax on an individual’s wages that are paid in excess of $200,000 in a calendar year – without regard to the person’s tax filing status.

What If Your Employer Is Not Withholding Social Security and / or Medicare Taxes?

While nobody likes to pay taxes, they are a necessary part of our lives – and, because of taxes, many benefits such as Social Security and Medicare are able to be paid out to the individuals who need and deserve them. So, what if your employer is not withholding either the proper amount of – or any – Social Security or Medicare taxes from your paycheck?

The truth is that failing to pay these taxes could essentially jeopardize your benefits in later years. Unfortunately, though, it is not at all an uncommon situation for an employer to stop paying these taxes for one reason or another. One of the biggest reasons is that an employer may mistakenly believe that an individual is employed as an independent contractor rather than an actual employee.

Navigating the tax code waters can be a difficult journey. There are thousands of different rules, regulations, and exceptions for every tax. It’s easy for an employee or employer to become confused, but any mistakes or errors could leave to serious problems.

“Employee mis-classification,” however, is a very serious issue – and, according to the IRS, it can actually result in penalties to the employer. It can also make a big difference in your income. The bottom line is that if you are an employee, your employer must – by law – pay half of your Social Security and Medicare (FICA) payroll taxes. If your employer is not doing so, they are committing an offense that could cost both them, and you, in the end.

The Bottom Line

You can’t really do anything about the federal and state taxes that are taken out of your paycheck. Regardless, if you are enrolled in Medicare or not, as long as you have a job that gives you a paycheck you’re going to be paying Medicare taxes.

It’s important that you get the health care coverage that you deserve. If you have any questions about Medicare or the related taxes, contact us today and we will be happy to answer those questions for you.

Need Additional Information?

At, we are here to help you. Whether you have questions about your Original Medicare, or need quotes from some of the top insurance companies for Medicare Supplemental Plans, we can help. Need to know the difference between Medigap Plan G and Medigap Pan F, well don’t be afraid to ask, contact us anytime at 1-800-376-0824.

About us
About us

Jason Patterson has been in the insurance industry for over fifteen years. Starting in 2005, he became one of the first agents to sell medicare supplements online. From that small start, he grew an agency that helped thousands of people with their insurance needs in all fifty states.

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