Medicare Wages

DEFINITION of 'Medicare Wages'

An employee's earnings that are subject to a U.S. payroll tax known as the "Medicare tax." Similar to the other U.S. payroll tax - Social Security - the Medicare tax is used to fund the government's Medicare program, which provides subsidized healthcare and hospital insurance benefits to retirees and the disabled. Medicare and Social Security taxes are levied on both employees and employers.

BREAKING DOWN 'Medicare Wages'

The employee's share of the Medicare tax is a percentage and is withheld from his or her income. For example the medicare tax was 1.45% of wages in 2011 and other employment compensation. The employer would contribute a matching 1.45%, for a total Medicare tax of 2.9%.

There is currently no upper limit on the amount of earnings subject to the Medicare tax, this limit having been removed with effect from December 31, 1993.

The rate can change and there can be additions. For example, as of 2013 an additional 0.9% hospital insurance tax is assessed on earned income exceeding $200,000 for individuals and $250,000 for married couples filing jointly, bringing their Medicare tax to 3.8%.

RELATED TERMS
  1. Medicare Advantage

    Hospital and medical insurance provided by private companies ...
  2. Medicare Part B Premiums

    A monthly fee that Medicare participants pay for medical insurance ...
  3. Payroll Tax

    Tax an employer withholds and/or pays on behalf of their employees ...
  4. Medicare Supplementary Medical ...

    Health insurance sold by private insurance companies meant to ...
  5. Medicare Part D

    A prescription drug benefit program that was created through ...
  6. Medicare Hold Harmless Provision

    A legal statement prohibiting an increase to Medicare B premiums ...
Related Articles
  1. Retirement

    How Much Medicaid and Medicare Cost Americans

    Medicaid & Medicare cost Americans plenty out of their paychecks. But how much, really? And what does that money buy?
  2. Retirement

    Have Medicare? Which Employer Health Plan to Get

    Over 65 and still working? You're eligible to register for Medicare, but should you also opt for employer health insurance, if offered – and which plan?
  3. Retirement

    Navigating the Medicare Maze

    After a certain age, it might seem like birthdays lose a little of their luster. But with your 65th birthday comes something that a lot of seniors look forward to: insurance coverage through ...
  4. Personal Finance

    When Should You Delay Enrolling in Medicare?

    On the surface Medicare doesn't look that pricey, but there are situations in which your finances and health might be better served by delaying enrollment.
  5. Financial Advisor

    How to Help Clients Navigate Medicare Enrollment

    Here's how financial advisors can be an essential guide in helping clients navigate the murky Medicare sign up waters.
  6. Financial Advisor

    How to Help Clients Navigate Medicare Enrollment

    Here's how to help clients navigate the maze of Medicare enrollment.
  7. Retirement

    How to Choose the Best Medicare Advantage Plan

    Medicare Advantage offers an alternative to Medicare and Medigap. Here’s what you need to know to choose the best plan.
  8. Retirement

    What to Do When Your Doctor Doesn't Take Medicare

    Stay and pay the full fee? Cut and run to another provider? Five ways to cope when Medicare threatens to break up you and your medico.
  9. Retirement

    Income Relating: Who Pays More for Medicare?

    You can retire, but you can never retire from income tax planning.
  10. Retirement

    Payroll Taxes: Picking Apart Your Paycheck

    Here's what gets deducted from your pay, what your employer pays and where your payroll taxes actually end up.
RELATED FAQS
  1. How is Social Security tax calculated?

    Find out how Social Security tax withholding is calculated, including the impact of the Medicare tax and the maximum taxable ... Read Answer >>
  2. I am working and every paycheck social security & Medicare take their deduction, ...

    I am 71 and collecting my deceased ex-husband’s social security. I feel I'm not getting my full social security ... Read Answer >>
  3. What are the Social Security tax caps?

    Learn how the Social Security tax cap works, what percentage of income is deducted for Social Security taxes and the history ... Read Answer >>
  4. What is the Social Security tax rate?

    Learn what the Social Security tax rate is, how it has evolved over the years, what is future may hold and a common complaint ... Read Answer >>
  5. How can I find out the Medicare sustainable growth rate?

    Read about the Medicare sustainable growth rate, where it is published and why it has proven to be an entirely ineffective ... Read Answer >>
  6. Will Medicare pay for long-term costs?

    Long-term care refers to a variety of care services (medical and non-medical) that helps meet the needs of people who have ... Read Answer >>
Hot Definitions
  1. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  2. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  3. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  4. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  5. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  6. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
Trading Center