What the Medicare tax is and why it comes out
The Medicare tax is a payroll tax that funds the Medicare program. It comes out of your paycheck automatically, and your employer matches what you pay. You will see it listed on your pay stub as "Medicare tax" or sometimes as part of "FICA taxes" (which stands for Federal Insurance Contributions Act).
Unlike income tax, which varies based on how much you earn and your filing status, the Medicare tax rate is the same for everyone. The employee portion is 1.45% of your gross wages. Your employer also pays 1.45%, so the total going toward Medicare is 2.9% — but only the employee's half comes from your paycheck.
This tax has been collected since 1966 and funds Medicare Part A, which covers hospital stays, skilled nursing care, and hospice. When you turn 65 and become may be able to access for Medicare, the benefits you receive come partly from taxes that current workers are paying right now.
Key Takeaways
- The Medicare tax rate is 1.45% of your wages, taken from your paycheck, plus a matching 1.45% paid by your employer.
- If you earn over $200,000 as a single filer (or $250,000 married filing jointly), an additional 0.9% Medicare tax applies to wages above that threshold.
- Self-employed workers pay both the employee and employer portions, totaling 2.9%, plus the additional tax if income exceeds the threshold.
- The Medicare tax you pay during your working years helps fund benefits for current Medicare recipients and builds credit toward your own future benefits.
- You can see your lifetime Medicare tax contributions on your Social Security statement, available free at ssa.gov.
The additional Medicare tax for higher earners
If you earn above a certain income threshold, you pay an additional Medicare tax of 0.9% on the amount over that threshold. For 2024, the threshold is $200,000 for single filers and $250,000 for married couples filing jointly. These thresholds do not change year to year.
This additional tax was added in 2013 as part of the Affordable Care Act. It applies only to wages above the threshold amount. For example, if you are single and earn $220,000, you would pay the additional 0.9% tax only on the $20,000 above $200,000, not on your entire salary.
Your employer is responsible for withholding this additional tax once your wages cross the threshold in a given year. If you have multiple jobs, you may end up paying more than you owe, but you can claim the overpayment when you file your tax return.
How self-employed workers pay Medicare tax
If you are self-employed, you pay both the employee and employer portions of the Medicare tax yourself. This is called self-employment tax. The total rate is 2.9% (1.45% employee + 1.45% employer), calculated on your net business income.
You pay self-employment tax when you file your annual tax return using Schedule SE. The good news is that you can deduct half of what you pay as a business expense, which lowers your taxable income. You also pay the additional 0.9% Medicare tax on self-employment income above the same thresholds ($200,000 single, $250,000 married filing jointly).
Self-employed workers often set aside money throughout the year to cover this tax, since it is not withheld from paychecks the way it is for employees. Many use quarterly estimated tax payments to avoid a large bill at tax time.
What your Medicare tax contributions actually fund
The Medicare tax you pay goes into the Hospital Insurance Trust Fund, which pays for Medicare Part A benefits. Part A covers inpatient hospital care, skilled nursing facility stays (up to 100 days per benefit period), home health services, and hospice care.
The trust fund is separate from the general federal budget. Money collected this year does not sit in an account waiting for you — it pays current beneficiaries' claims. When you turn 65 and become may be able to access for Medicare, your Part A coverage is funded partly by taxes that workers are paying at that time.
Medicare Parts B, D, and most of Part C are funded differently, through general federal revenue and beneficiary premiums. The Medicare tax on your paycheck specifically supports Part A only.
How to check your lifetime Medicare tax record
You can see how much you have paid in Medicare taxes over your lifetime by checking your Social Security statement. This statement shows your earnings history and the taxes withheld, including Medicare tax.
To view your statement, create an account at ssa.gov and log in to "my Social Security." You can see your earnings year by year and the total Medicare tax you have paid. This is useful if you want to verify that your employer reported your wages correctly or if you are curious about your contribution history before you turn 65.
If you notice an error — such as wages that were not reported or taxes that were not withheld — you can contact Social Security to request a correction. Bring documentation like W-2 forms or pay stubs to support your claim.
What happens to the Medicare tax if you change jobs
The Medicare tax continues to be withheld from every paycheck, no matter how many jobs you have or how often you change employers. There is no annual limit on how much Medicare tax you pay, unlike Social Security tax, which stops once you reach the wage base limit for the year.
If you work multiple jobs in the same year, each employer withholds Medicare tax on the wages they pay you. You do not get a refund for paying more than once, because the tax is not capped. However, if you overpay the additional 0.9% Medicare tax across multiple jobs, you can claim the overpayment on your tax return.
When you leave a job, the Medicare tax withheld stays with that employer's report to the IRS. Your new employer begins withholding from your first paycheck there. The total amount you have paid in Medicare tax over your lifetime is tracked by Social Security.
Medicare tax and your future benefits
Paying Medicare tax does not automatically mean you will receive Medicare benefits at 65. You must have worked and paid into Social Security for at least 10 years (40 quarters) to be may be able to access for Medicare Part A without paying a premium. Most people who have worked full-time meet this requirement.
If you have not worked long enough, you can still buy into Medicare Part A at 65 by paying a monthly premium. The premium amount depends on how many quarters of coverage you have. Even if you do not meet the work requirement, you may be may be able to access for Medicare at 65 based on age alone, though you would pay higher premiums for Part B.
Your Medicare tax contributions are one part of the system that makes your future benefits possible. The other part is the premiums you pay once you are enrolled in Medicare, which cover the costs that the trust fund does not.
Frequently Asked Questions
Why do I see Medicare tax on my pay stub if I am already on Medicare?
Once you turn 65 and enroll in Medicare, you continue to pay Medicare tax on your wages if you keep working. The tax does not stop at 65. This money goes toward the Hospital Insurance Trust Fund that pays benefits for all Medicare beneficiaries, including you.
Can I opt out of paying Medicare tax?
No. Medicare tax is mandatory for all employees and self-employed workers. There are very limited exceptions for certain religious groups, but these are rare and require specific IRS approval. For most workers, the tax is non-negotiable.
Is Medicare tax the same as Medicare premiums?
No. The Medicare tax on your paycheck is a federal tax that funds the program. Medicare premiums are what you pay once you are enrolled in Medicare at 65. Premiums cover Part B (doctor visits), Part D (prescriptions), and supplemental plans. They are separate from the payroll tax.
What if my employer did not withhold Medicare tax from my paycheck?
Contact your employer's payroll department when ready. Medicare tax should be withheld from every paycheck. If it was not, your employer may owe back taxes and penalties. You can also report the issue to the IRS using Form 8919 when you file your tax return.
Does Medicare tax count toward my Social Security benefits?
No. Medicare tax and Social Security tax are separate. Social Security tax (6.2% employee, 6.2% employer) funds your future Social Security retirement benefits. Medicare tax funds your Part A hospital coverage. Both are withheld from your paycheck, but they go to different programs.