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The Curious Bag
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The FICA-HI tax is a federal payroll tax collected under the Federal Insurance Contributions Act (FICA). FICA taxes are used to support Social Security and Medicare.
Facts
The HI in FICA-HI stands for "Hospital Insurance." The FICA-HI tax is used to support Medicare, while the FICA-OSADI tax supports Social Security.
Features
The FICA-HI tax is 1.45 percent of the total paycheck and is applied to all wages earned. There is no ceiling on the FICA-HI tax.
Considerations
Employers must match the employee's FICA-HI contribution. The self-employed must pay both shares, since they're an employee and a boss.
Location
An employee's FICA-HI tax contribution is listed on each paycheck stub.
Uses
Revenues generated from the FICA-HI tax is placed in the Hospital Insurance Trust Fund and used to finance inpatient hospital, skilled nursing facilities, home health, and other similar services.
History
The Social Security Act was amended in 1965 to include Medicare hospital insurance, thus ushering in the FICA-HI era. During the 1980s, the FICA-HI taxable pool expanded to include all federal, state, and local employees.
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