FICA vs. Medicare: What’s the Real Difference?
Both are payroll taxes — but they fund different things. FICA covers Social Security and Medicare. Medicare specifically funds healthcare for people 65+ (and some with disabilities). FICA is the law that makes both happen.
Table of Contents
Understanding the FICA Umbrella
FICA stands for Federal Insurance Contributions Act. It’s a law requiring employers and employees to pay taxes that fund:
- Social Security (OASDI): Old-Age, Survivors, and Disability Insurance
- Medicare: Healthcare for retirees and some disabled individuals
Your paycheck has two separate deductions under FICA — one for each.
Medicare: The Healthcare Half
Medicare is part of FICA, but only one piece of it. It funds hospital and medical insurance for eligible Americans.
| Tax | Who Pays? | Rate | What It Funds |
|---|---|---|---|
| Social Security (OASDI) | Employee + Employer | 6.2% each (up to $168,600 in 2025) | Retirement, disability, and survivor benefits |
| Medicare | Employee + Employer | 1.45% each (no income cap) | Health insurance for seniors and certain disabled people |
| Additional Medicare | Employees earning over $200,000 | +0.9% (employee only) | Helps fund Medicare expansion |
Total FICA rate: 7.65% for employees, matched by employers.
Who Actually Pays FICA?
Everyone with earned income in the U.S. — That includes employees, employers, and self-employed individuals (who pay both shares, 15.3%).
If you’re self-employed, it’s all reported through SECA (Self-Employment Contributions Act) instead of FICA, but it funds the same programs.
Example Paycheck:
Let’s say you earn $2,000 in a pay period:
- Social Security (6.2%): $124
- Medicare (1.45%): $29
Total FICA withheld: $153
Your employer matches that $153.
Why It Matters
FICA = Social Security + Medicare
It’s the federal law that makes both programs possible — every paycheck funds your future retirement and healthcare benefits.
Medicare = Healthcare for 65+
It’s part of FICA but only covers medical costs.
Even though FICA includes Medicare, the IRS lists Medicare as its own line because it’s a separate fund with a different tax rate and no income cap.
*In other words: FICA is the umbrella — Medicare is one of the buckets underneath it.*
FICA and Medicare on Your Paystub
When it comes to FICA vs Medicare, think of them as partners, not rivals. FICA is the law that collects both the Social Security and Medicare taxes — the two major programs that help fund your future income and healthcare.
Every paystub you get shows these deductions side by side, quietly building your safety net for retirement and beyond. With FormPros, you can easily generate professional paystubs that clearly show your FICA and Medicare tax amounts — making them simple to read, verify, and keep on file whenever you need them.
FICA vs. Medicare: What’s the Real Difference? FAQs
-
How do I find my OASDI?
It’s listed on your paystub or W-2 as “Social Security” or “OASDI”. Same thing.
-
Is OASDI refundable?
No. It’s not a regular tax — it’s a contribution toward your Social Security benefits.
-
Why is there an “Additional Medicare Tax”?
It applies only to high earners making over $200,000 (single) or $250,000 (married filing jointly).
-
What’s the difference between FICA and SECA?
FICA applies to employees. SECA applies to self-employed people who pay both the employee and employer shares.
-
How much FICA tax do I pay total?
7.65% of your gross wages (6.2% Social Security + 1.45% Medicare).
