Medicare Tax Rates

Like Social Security, Medicare is funded by tax dollars. The Social Security and Medicare tax rates are withheld from your paycheck and are matched by your employer. Learn more about how your tax dollars contribute to Medicare and what it means for your health care costs.

American flag with money, a stethoscope and medicine

How do taxes fund Medicare?

The Federal Insurance Contributions Act (FICA) is the law that requires you and your employer to contribute equal amounts to the costs of maintaining Medicare and Social Security.

The 2017 income tax rates you paid to contribute to Social Security and Medicare** were:

  • 45% for Medicare
  • 2% for Social Security

If you make over $200,000 per year, or if you and your spouse file your income taxes together and make a combined total of $250,000 or more, you are required to pay an additional Medicare tax of .9% on your income.***

Medicare Part A benefits

Part A covers some of the costs associated with:

  • Hospital care
  • Care received in skilled nursing facilities
  • Hospice care
  • Limited home health care

If you worked and paid Medicare taxes for 10 years, you will not likely pay a monthly premium for your Medicare Part A benefits. If you haven’t paid according to these tax rates for at least 10 years, you may be eligible for Part A coverage, but you may have to pay a monthly premium

Medicare Part B and health care costs

Doctor’s office visits, medical lab work, outpatient health care services and medical supplies are covered under Medicare Part B. Everyone pays a monthly premium for these services, which is automatically withheld from your Social Security check if you are receiving those benefits.

In 2017, monthly premiums covered roughly 25% of Medicare Part B program costs, and the remainder of the funding comes from the federal budget.****

Medicare Advantage plans may provide additional benefits

While Original Medicare benefits are provided by the federal government itself, some people prefer to get those health care benefits through Medicare Advantage plans. Medicare Advantage plans are offered by private insurers and cover all of the Original Medicare health care benefits.***** These plans may also offer additional services that can include coverage for: 

  • Dental care
  • Hearing care
  • Vision care
  • Health and wellness programs 

Learn more about how a Medicare Advantage plan could be a good fit for your health care needs. Call TTY Users: 711 to connect with a licensed insurance agent today.

Copyright © 2018 TZ Insurance Solutions LLC. All rights reserved.

**Social Security Administration, “OASDI and SSI Program Rates & Limits, 2017.” Published 2017. https://www.ssa.gov/policy/docs/quickfacts/prog_highlights/RatesLimits2017.html

***IRS, “Questions and Answers for the Additional Medicare Tax. Published 2017. https://www.irs.gov/uac/additional-medicare-tax-what-you-need-to-know

****Kaiser Family Foundation, “The Facts on Medicare Spending and Financing.” Published July 18, 2017. https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/

***** Medicare Part A still covers hospice care, even if you are enrolled in a Medicare Advantage plan.

MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts; enrollment in any plan depends upon contract renewal.

Plan availability varies by region and state. For a complete list of available plans, please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.

Medicare has neither reviewed nor endorsed this information.