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. State Health Insurance Assistance ...

    State Health Insurance Assistance Programs (SHIP) offer free ...
  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. Federal Insurance Contributions ...

    A U.S. law requiring a deduction from paychecks and income that ...
Related Articles
  1. Financial Advisor

    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

    Medicare Costs to Rise for Most in 2017

    Most senior citizens will see their Medicare expenses rise in 2017.
  3. Managing Wealth

    It's Open Enrollment: Move to Medicare Advantage?

    Oct. 15 - Dec. 7 is the time (after joining) to switch from Medicare's flexibility to the often broader coverage or lower cost of Medicare Advantage.
  4. Managing Wealth

    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?
  5. Financial Advisor

    Breaking Down Medicare Open Enrollment for Clients

    For financial advisors, open enrollment is an important opportunity to be of service to clients, especially when it comes to reviewing Medicare options.
  6. Retirement

    Navigating the Maze of Medicare: Know the Costs

    Navigating the maze of Medicare is complex. Here's what you need to know about the financial and tax aspects.
  7. Insurance

    Should Retirees Worry About Medicare Under Trump?

    With the Affordable Care Act on the chopping block, there are rumbles that Medicare could be next.
  8. Retirement

    When Am I Eligible For Medicare?

    You’re eligible for Medicare when you reach age 65 or meet other requirements.
  9. Insurance

    7 Common Medicare Mistakes and How to Avoid Them

    Medicare is confusing to many people, so if you're eligible, make sure you understand the pitfalls that come with making decisions during open enrollment.
  10. Managing Wealth

    Planning for Healthcare

    Planning how to pay for healthcare during retirement is a must—and the earlier you do it, the better. Medicare often fall short, so here are your options.
RELATED FAQS
  1. What effect has the sustainable growth rate had on Medicare disbursements?

    Read about the impact of the Medicare sustainable growth rate mechanism on rising Medicare costs and physician reimbursements ... Read Answer >>
Hot Definitions
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  2. Acid-Test Ratio

    A stringent indicator that indicates whether a firm has sufficient short-term assets to cover its immediate liabilities. ...
  3. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
  4. Taxes

    An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government ...
  5. Impaired Asset

    A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result ...
  6. Solvency Ratio

    One of many ratios used to measure a company's ability to meet long-term obligations. The solvency ratio measures the size ...
Trading Center