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Federal Insurance Contributions Act (FICA) - Social Security and Medicare Taxes

Social Security pays benefits when an individual retires, becomes disabled, or dies.  There are certain eligibility requirements for each type of benefit.   Family members are also sometimes eligible for benefits when these events occur. 

The Social Security & Medicare Payroll Taxes

Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA). The payroll taxes are sometimes called "FICA taxes."  FICA taxes are collected at a rate of 7.65% on gross earnings, broken down to 6.2% for Social Security (Old-Age, Survivors, and Disability Insurance or OASDI) and 1.45% for Medicare. 

 

Social Security’s Old-Age, Survivors and Disability Insurance (OASDI) is a payroll tax that pays for cash benefits to entitled beneficiaries.  Hospital Insurance (HI) tax pays for hospital benefits for people covered by Medicare.  Employers and employees split these taxes equally. 

 

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