What does MED / EE mean on my paycheck?
We are going to answer the main question of this article: what does MED / EE mean in Spanish? First of all, you should know that these are the acronyms of a deduction that is used to finance one of the largest medical and health insurance programs in the country: Medicare.
Did you know that… all Americans can access the Medicare health insurance program to enjoy basic health services for free?
Although there are parts of Medicare that citizens must pay for themselves, the main part – Medicare Part A – covers services such as hospitalization and emergencies.
Now, what these acronyms mean in Spanish is nothing more than “Federal Medicare / Employer-Employee Tax”. The money raised is used to pay for the costs of Medicare Part A hospitalization and emergency services.
How does the FED MED / EE deduction work?
The deduction of this tax is made just as the income tax is made, which means that it is a withholding made by the employer and then reported to the treasury.
The good part is that the amount deducted to fund Medicare does not count towards the taxpayer’s federal income tax return.
Who must pay the FED MED / EE tax?
Everyone Specifically, all US taxpayers who cannot file a qualified exception.
For example, if you live in the United States and are an active part of a religion that does not believe in health insurance or in the treatments and operations performed to save someone’s life, you can go to the IRS to request exclusion from the taxpayer registry of the FED MED / EE tax.
Now, it is important that you know that the list of qualified exemptions is not limited to this cause and that it is not as long as it would be desired. So much so that the IRS has not added new qualifying grounds in many years.
If you think you qualify for an exemption, we recommend that you contact the IRS immediately to file the appropriate forms to begin the evaluation process.
If the exemption request is approved, you will receive a communication from the IRS that you must give to your employer to eliminate the amount of the withholding.
How much FED MED / EE tax is paid on the paycheck?
The total amount of the FED MED / EE deduction is really low: it represents 2.9% of the gross monthly salary. But, if the tax is deducted from the paycheck, why does the acronym refer to the employer? Let’s see:
When a person works directly with a company, the employee pays half the tax and the employer the other half. What about independent contractors who are self-employed? Unfortunately, they will have to pay 2.9% on their own.
The good part for independent contractors is that they can get out of paying half the FED MED / EE tax by filing business expenses.
Can I access Medicare if I asked for an exemption?
Unfortunately , no. If you applied for a qualified exemption and it was granted by the IRS, you will not have access to Medicare health insurance when you turn 65. In this case, you will have to look for health insurance on your own
What is OASDI and what does it mean?
If you look closely at a paycheck stub or the statement that contains the information of a payroll check, you may notice an item or deduction item labeled “OASDI” and ask yourself what is OASDI? What does it mean?
Well, OASDI is the acronym in English for “Old Age, Survivors and Disability Insurance”. In a paycheck , OASDI refers to taxes charged on personal income. These retained funds will be destined to finance the Social Security programs.
For payroll purposes, OASDI means a tax deducted from wages or salaries. One of the “payroll tax” deductions in the United States that is required by law.
It is part of the federal social security system , which is the responsibility of the Social Security Administration (SSA or Social Security Administration).
Sometimes the OASDI payroll deduction can also be called a FICA tax.
FICA refers to the Federal Insurance Contributions Act, legislation that authorizes the federal government to collect this tax that finances social security in the US.
The OASDI, better known as Social Security, provides benefits to tens of millions of people in the United States. The Official Blog of the Social Security Administration explains what FICA is.
What other programs are funded by my paycheck?
-And really to be honest – there are very few programs that are federally funded through deductions made to the checks paid by taxpayers. Medicare is one of them and it is the most important. The reason?
In addition to being one of the largest programs in health, any American who has paid his taxes throughout his working life , will be able to access it for free when they turn 65 years of age.
How do OASDI taxes work?
Funds withheld by the employer must be reported to the federal government. The state, through the SSA, manages these funds in two trusts:
The first corresponds to the Old-Age and Survivors Insurance Trust Fund (OASI or Old-Age and Survivors Insurance Trust Fund) for retirement and a second corresponds to the Disability Insurance Trust Fund (DI or Disability Insurance Trust Fund ) for disability.
Investopedia.com offers other details about how the Old Age, Survivors and Disability Insurance Program (OASDI) works.
It should be clarified that the FICA tax does not apply to “unearned income” that is, those that do not derive from an employment relationship, such as interest and earnings from shares.
Remember that ” earned income ” means any wages, tips, and other work payments that you receive.
The OASDI deduction only applies to the first $ 137,700 of your earned income per calendar year. Thus, if your earnings reach that amount before September 30, you will not have to pay social security taxes on your additional wages until December 31.
We hope this article has been useful for you to know what MED / EE means in my paycheck, thanks for reading.