How Do Medicare Payroll Taxes Affect Your Benefits?
How do Medicare payroll taxes affect my benefits
Medicare payroll taxes, like Social Security taxes, are automatically deducted from your paycheck under the Federal Insurance Contributions Act (FICA). Ultimately, these accumulated tax payments determine whether you receive without having to pay a premium. If you or your spouse had Medicare taxes deducted from your paychecks for at least 40 quarters of work, which is 10 years or more, Part A is available at no cost to you. As an employee, you must earn a certain amount of money each calendar quarter. That amount changes each year. In 2022, you earn one work credit for every $1,510 in earnings ($1,640 in 2023), up to a maximum of four credits a year. At the present federal minimum wage of $7.25, that’s a little more than five 40-hour weeks of work in a 13-week quarter. If neither you nor your spouse earned 40 work credits, you’ll have to pay monthly premiums to receive Part A coverage, that is once you enroll in Medicare at age 65 or later. In 2022, if you or your spouse paid Medicare taxes for 30 to 39 quarters, you’ll pay $274 a month for Part A ($278 in 2023). If you or your spouse paid Medicare taxes for fewer than 30 quarters, you’ll pay $499 a month for Part A ($506 in 2023). You may be eligible for Medicare before age 65 under different rules if you qualify or if you have or ALS, also known as . What do I pay in Medicare payroll taxes
As an employee, you pay 6.2 percent of your applicable earnings in and 1.45 percent on all earnings in Medicare taxes. Your employer contributes an equal amount, for a total of 12.4 percent for Social Security and 2.9 percent for Medicare. Social Security taxes are assessed only up to a certain income level, which is $147,000 in 2022 ($160,200 in 2023), but Medicare taxes are assessed on your total income. If you earn $50,000 a year, you’ll pay $725 annually in Medicare taxes. If you’re filing federal taxes as a single earner and your income is more than $200,000, then you must pay an extra 0.9 percent in Medicare taxes on your income above that threshold. The same applies to those who are married, filing jointly and making $250,000. If you’re self-employed, you’ll pay both the employer’s and the employee’s share of Social Security and Medicare taxes; however, you can deduct half of what you pay when you file your income taxes. And whether you’re self-employed or not, you can count on paying Medicare taxes for as long as you’re working, even if you’re already receiving Medicare benefits. Who doesn t pay Medicare taxes
Federal employees were exempt from paying FICA taxes before January 1983. However, they started paying the Medicare portion of the FICA tax after that date. Meanwhile, federal employees as of Jan. 1, 1983, received credit toward Medicare eligibility for quarters that they worked before that date without paying Medicare taxes. Some federal, state and local government employees still pay only the Medicare portion of the FICA tax but not the Social Security portion. The quarters of coverage they earn can be used to meet the requirements for premium-free Part A, but not for monthly . Members of certain religious groups may be exempt from paying Social Security taxes if they are opposed to public insurance for religious reasons. But they must waive their rights to receive Social Security and Medicare benefits. Keep in mind
If you didn’t pay Medicare payroll taxes for long enough to qualify for premium-free Part A, you may be able to get help with the premiums from one of the in your state. Eligibility is based on your income and assets, depending on your state. For example, the helps pay the premiums, deductibles, coinsurance and copayments for Parts A and B. Published October 28, 2022 More on Medicare
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