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Instructions and Help about Why do i pay medicare tax

Have you been researching Medicare Part D plans and feeling thoroughly confused about things like the deductible and the coverage gap if so you are in luck because in this video I'll go over how Medicare Part D works and what the four stages of coverage are in every Part D plan hi there if we haven't met yet I'm Danielle Roberts Forbes finance council member and co-founder here at boomer benefits where we prfree Part D analysis each year for all of our Medigap and Medicare Advantage policyholders although Part D drug plans are offered by private insurance carriers each plan must meet federal guidelines all drug plans have four stages and Medicare sets the limits for each of these stages during the year companies can offer benefits that are richer than the minimum standard but not less than that standard the four stages of Part D are the deductible the initial coverage level the coverage gap or doughnut hole and catastrophic coverage let's start with a deductible the deductible is the amount that you pay out-of-pocket first each year on your medications before your co-pays kick in under your plan Medicare sets the maximum deductible each year and Part D insurance companies must keep their plan deductible at or below that number in 2022 the maximum deductible will be four hundred and fifteen dollars again companies can waive that deductible or set a lower deductible but they can't charge a higher deductible here's how the deductible works if your plan has a four hundred fifteen dollar deductible you will pay out of your own pocket for your medications until you have spent that much and satisfied the deductible for example if you have a medication that costs a hundred dollars when you go to the pharmacy you'll pay a hundred and then you will only have three hundred and fifteen left to spend before you have fulfilled the deductible and moved on to the initial coverage level I mentioned earlier that some insurance companies may offer a lower deductible than Medicare standard deductable or they may waive the deductible entirely a plan with no deductible though isn't nests Sara Lee the one that's most cost-effective sometimes you may find a plan that waives the deductible but you may also find that that plan has higher co-pays or premiums than another plan with a deductible in my experience you'll spend that money one way or the other either in and upfront deductible or tacked on to the co-pays that you spent throughout the year the second stage of a Part D drug plan is the initial coverage stage during this stage you will pay a copay or coinsurance for each medication based on what tier the drug falls into insurance companies have a list of covered medications on each plan and these drugs are usually broken down into five tiers preferred generic non-preferred generic preferred brand non-preferred brand and specialty medications each tier will have a copay.


Why do I have to pay a Medicare tax?
A Medicare tax is no different from other taxes you have to pay such as SocialSecurity and Medicaid. Medicare is a health insurance program for seniors andpeople with certain disabilities and is governmentfunded meaning it is paidfor through public taxes.Employees and employers are each responsible for a Medicare tax of 1.45percent for a total of 2.9 percent on each person’s earnings. Higher incomeearners must pay an additional 0.9 percent Medicare surtax.Medicare taxes and Social Security taxes make up the FICA Federal InsuranceContributions Act tax. Every worker in America is required by law to pay FICAtaxes.Bear in mind that the taxes you pay for Medicare do not apply to MedicareSupplement Insurance. These are private health insurance plans that help paycertain outofpocket costs associated with Original Medicare such asdeductibles coinsurance and copayments.In order to qualify for premiumfree Medicare Part A you or your spouse musthave paid FICA taxes for at least 10 years. So the reason you need to paytaxes into Medicare is not only so current seniors can receive health carebut so that you will one day be able to do the same.
How will "Medicare-for All?" Be funded? The average U.S household already pays24% in taxes, so increasing the tax rate probably wouldn't be very popular.
Calculate what you pay in taxes.Calculate what you pay in insurance premiums.Calculate what you pay in copays and deductibles.Calculate what your employer pays in insurance premiums for you.Add them all up.Kaching The total you’re paying now will be more than the cost of your taxesonce we switch to a singlepayer Medicare For All system.In fact the average total that Americans pay is double the average cost thatpeople in other developed countries pay for health care.COST COMPARISONAmericans spend an average of 10348 per person for health care. Canadiansspend 4753. The overall average global cost—which is inflated due to thehigh cost that Americans are stuck with—is 5198.How do healthcare prices and use in the U.S. compare to other countries PetersonKaiser Health System TrackerHow can that beREMEMBER ZERO INSURANCE EVER AGAINWorkers in those countries dont pay health insurance nor do their employers.Nor they pay deductibles. And most do not have copays.Sure when we switch to Medicare For All your taxes will be higher but yourinsurance premium will be zero as will your employer’s contribution as willyour deductible and in some countries there is not even a copay.You’ll probably get a raise from your employer because your pay is based onyour salary plus their cost of your insurance. Without having to payinsurance they may give you more pay. If you have a negotiated compensationpackage they’ll be required to increase your pay by the amount they used tospend on your premiums.In other words you’ll end up with more aftertax income.THE CURRENT RIPOFFAbout 35 cents of every dollar spent on health insurance goes toadministrative proceedings costs and profits—so that will go away.Republicans cater to large corporate donors and the insurance companies areamong their largest. There will be intense lobbying by those companies againstMedicare For All.The louder the insurance companies scream the more you should want MedicareFor All because it means they are screaming about all the money they will losewhen they can no longer rip off Americans.And Republicans will have fewer corporate jets to ride on to fewer countryclubs so they will strongly opposed Medicare For All.Not because it will cost you more but because it will cost them so much.AN END TO PRICE GOUGINGFurther with the federal government as the singlepayer they will be able tonegotiate an end to the outrageous prices Americans pay for drugs.Example My dog became diabetic and needed insulin. I went to a regularpharmacy near my house—the type where nearly all payments are throughinsurance. The cost me 196 because I couldn’t use insurance forfor my dog.Luckily before that bottle was gone someone told me about Walmart. I hadn’tset foot in a Walmart in decades but I do now because the exact samebottle—same brand same size—cost 26.My regular pharmacy still charges 196 without insurance. I know because Itook my 26 Walmart receipt to them and complained.They said they have to charge the higher price because they have to cover thecosts of processing the claims and suggested I continue using Walmart since Ihad to pay for it myself.So they get away with ripping off the insurance companies because the averageenduser at the pharmacy pays ten bucks out of pocket and doesnt care aboutthe hidden total cost.Medicare For All will end that practice and costs will go down.IT WILL OPEN UP FREE ENTERPRISECheck the comments thread below for the brilliant reminder from JeffVerkouille about how much our current system stifles creativity andentrepreneurship.I would bet that millions of businesses have never been formed because thewouldbe founder would lose health insurance.You’d think that Republicans would be strongly behind Medicare For All becauseit would be a massive boon to business development. Why aren’t they Well Ispeculate it’s because you—with your new business that you might found onceyou’re free from worry about health care costs—won’t be taking them for rideson your corporate jet. And the megainsurance companies have some of thenicest business jets in the country—so GOP members of Congress will lose alot.IT WOULD STOP ILLEGAL IMMIGRANTS STAYING FOR YEARSWith Medicare For All everyone would have to be registered. If you cross theborder illegally and went to work in one of Trump’s hotels or golf coursesyou couldn’t get health care unless you became legal and registered forMedicare For All.In other words Medicare For All would prexactly the tracking systemthat immigrant haters want. Under our current horribly flawed system illegalimmigrants can just show up at one of our emergency rooms and they get freemedical care—which then shoots up the costs we all pay for our premiums.Under Medicare For All they would still get free care on demand—we’re notgoing to watch illegal immigrants die in our emergency rooms—but they’d thenbe known as illegal and they’d be deported.In other words the incentive to cross illegally would be gone.Democrats need to sell their Medicare For All push as a simultaneous solutionfor the undocumented worker problem.GHOULISH INDEEDI’ve gotten some comments that say I’m being ghoulish for suggesting to usefree medical care as a way to catch illegal immigrants. They say it will leadto them dying rather than seeking care. Have you ever received medical care as a visitor in a country that has freemedical care DuhhhI’ve been on trips twice with people who needed hospitalization. They’re goingto see your passport and your visa. They will know all about you.If you have entered one of those countries on a visa and have stayed beyondits expiration date you will still receive medical care but you will becaught and you will be sent home when you’re well enough to travel. They’renot going to just let you go—unless of course you’re within the limits ofyour visa in which case they do indeed simply let you go. You don’t spend apenny.The first time I witnessed this the American patient thought she’d have to atleast make a copay. They’d never heard that word. They had no system withinthe hospital to accept payment—not one single Euro.Something like 85 of illegal immigrants in the USA are people who enteredlegally and overstayed their visa. Try that in another country and then go infor medical care and see what happens to you.If you think it’s ghoulish then don’t overstay your visa in a country thatprovides free health care for all citizens all legal aliens and all visitorswho are there on legal visas. But damn don’t call me ghoulish for tellingyou the truth.READ COMMENTSIt turns out I came up short on all the benefits and all the ways that itwould be paid for. Alert Quora members have posted some excellent comments onthis topic.The bottom line here is that Republicans want you to believe that Medicare ForAll will be an entirely additional expense to you. They do not want you toknow about the cost reductions and other benefits because once that’s wellknown people are going to be angry at the GOP for what they’d done to healthcare.And they want you believe that the USA their own country is so inherentlyinferior to all other developed countries that we alone cannot make this work.It’s been in place for decades in other countries so please ask yourRepublican friends this question Why do you think that America is so inferior to other developed countriesthat we cannot do what they have all done—at half the cost of our system
Our startup just got a $100,000 check from an angel investor and it is in thebank account. How do I keep track of expenses, pay employees, keep my booksfor tax purposes, etc.? How do I pay the payroll and Medicare tax? Where do Iwithhold it to?
The key right now is to keep things simple so you can focus on developingyour productservice and gaining customers. For basic accounting QuickBooks Online is a good choice. It’s cloudbased easy to use and very costeffective. Xero is another. Keep records of all your receipts and invoices. Expensify is a good and easy system to use. Establish an invoicing schedule to manage your accounts receivable AR. Track who owes what and make sure you stay on top of collections. I recommend Bill.com. It allows you to easily send bills and set email reminders. This part is crucial bring in a professional to manage your taxes. Payroll taxes especially are not worth trying to muddle through on your own the risk of non compliance and fines is way too high Providers like ZenPayroll Intuit and others offer easy and costeffective solutions that will withhold taxes and file for you.
Why is it mandatory to pay Medicare and social security taxes for people onthe H1 visa?
This is a public policy question and Im not sufficiently familiar with thedrafting of the laws and the regulations covering this to give anyauthoritative insight. I will however suggest possible explanations for theapparent inconsistencies and inequities in the operation of the rules.First of all its important to understand that the Medicare and SocialSecurity taxes are collected by a different department of the US Federalgovernment than the one that administers the H1 visa. Not only that the lawsestablishing the various programs are written and managed by differentcommittees in the House and the Senate. These committees tend to be quitefocused on the minutae of the programs that they control and not on thedetails of other programs.Moreover there is rarely compelling force behind efforts to rationalize theactions of the laws and regulations between executive departments.To put this in perspective the Center for Immigration Studies estimates thetotal population of H1B visa holders at about 650000 Estimating the Size ofthe H1B Population in the U.S.. Compare this with the total number ofemployed people in the US about 59.9 of 322 million or about 193 millionand you see that this inequity particularly since it applies to people whocan not vote is unlikely to be addressed.Now lets ask whether it is even an inequity at all. As you observe asubstantial number of H1 visa holders become permanent residents or citizens.This generally happens after many years as an H1 visa holder as the Centerfor Immigration Studies notes once an H1B is granted the recipient canroutinely expect to stay working in the US for six years before extensionsbecome difficult.If after working in the US for six or more years the visa holder receives agreen card then she can reasonably expect to be able to stay here throughretirement. A full career is roughly forty years long so a visa holder whoreceives a green card after six to ten years of working in the US will haveaccumulated 15 to 25 of a full working career. This suggests that given thatthey might want to become permanent residents it is correct policy for themto contribute to Social Security and to Medicare from the beginning as part oftheir payroll withholding.The only remaining question is whether it would be more fair to refund thosecontributions if at the end of H1B visa the person leaves the US.I would say not since theres a chance that the person may return to the USas an immigrant at some time in the future in which case they will take uptheir Social Security and Medicare account where they left off.Finally as a noncitizen you may be eligible for Social Security benefitsbased on your earnings in the US. The rules are complex and depend on whereyou live and what country you are a citizen of so I suspect that youll needprofessional advice on the details. Heres a Social Security document aboutthis topic httpswww.ssa.govpubsEN051.... In other words your SocialSecurity contributions are not lost to you.
Have you seen how much you could save under President Trump's tax reform?
The problem with this question it assumes if I realize I am saving 1000next year then I should be all in for this plan. Since I am not anindividualistic ahole the answer to the question really does not matter.Yes my wife and I will probably do fine under this plan. In fact even if ourtaxes were even we would do well because of our large 403B contributions. IfI was an individualistic ahole that is all I would care about. But I am not.So what I do care about are the following 1. My son and daughter will no longer be able to deduct student loan interest which means they are less likely to go further in school. 2. If my daughter enters the master’s program she wants she will have to pay taxes on the stipend. So a double whammy. 3. My stepdaughter will no longer be able to deduct the hundreds of dollars a year she spends on class room supplies. 4. The housing market will tank above the 500K range driving the price of housing for lower priced home up in general. Affordable housing which is already scarce will be scarcer. 5. The price of health insurance will increase for many of my extended families. It sucks because they voted for this mess but will likely bear the consequences. Hopefully nothing catastrophic happens. 6. For my extended family no new jobs will get created due to the tax changes trickle down does not work that way. 7. Next year the same SOBs will talk about how SS Social Programs and Medicare can no longer be funded due to low tax revenue. But another 20B for Defense will be ok. 8. Where will the money to fight Opioid crisis come from there will be a reduced tax base. 9. And the debt increasing the debt to pay off 2 wars and keep the world from spiraling into chaos I get that. Increase the debt so corporations and the rich get more money I don’t get that.I just threw those out. I’m sure there will be many other manifestations allof which that measly 1000 will not cover.EDIT I appreciate all the upvotes.In the comments are many items I did not innumerate in my post. What’s odd tome is there have been few posts listing the positives of this new proposedtax law. What’s fascinating is that even the President’s economic advisorindicated that he was not sure the proposed tax plan would work and if notthey “go back to the drawing board”. This gives a sense to me of simply howuncaring the current Republicans are of the people this really impacts.To go along with that are Senator Grassley’s comments“I think not having the estate tax recognizes the people that are investing...as opposed to those that are just spending every darn penny they have whetherit’s on booze or women or movies.”Followed by Rep. Marshall’sJust like Jesus said the poor will always be with us. There is a group ofpeople that just dont want health care and arent going to take care ofthemselves. The Medicaid population which is a free credit card as a groupdo probably the least preventive medicine and taking care of themselves andeating healthy and exercising.The GOP has turned from a party of building interstate highways promotingscience founding the EPA ushering in Title 9 to one of All that matters ishow well I can line my donors and my pockets. It’s saddening to see thedecay of civilized society as it slowing unfolds.
If I get a W2 with no Social Security/Medicare taxes withheld, do I still haveto pay self-employment tax on it?
It may very well be correct there are some cases where this is permissible 1. If you are a college student performing services at the university at which you are a student the university does not have to withhold SS or Medicare taxes. 2. If you are a US citizen employed outside the US by a foreign employer the foreign employer is not required to withhold SS or Medicare taxes. 3. If you are under the age of 18 and working for a parent the parent does not withhold SS or Medicare taxes. 4. If you are a public employee who is a member of a separate retirement system that provides similar benefits SS and Medicare withholding is not required. 5. Third party sick pay reported on a W2 is exempt from SS or Medicare withholding when received more than six months after the date the employee last worked for the employer or when the sick pay is based on employee contributions made with aftertax dollars.If none of the above apply to you and you are sure that you have a W2 andnot a 1099 ask your employer.
If you don't pay FICA taxes, can you draw SS/Medicare when you retire?
If you never paid fica taxes you would never be eligible for SS benefits.Since the system was designed to be a pay as you go system it is notpossible to buy into it or self pay to accrue credits. Interestingly thereare entire groups of workersinstitutions that dont pay into social securityincluding universities counties police fire departments school districtsgovernment agencies and state entities. Workers associated with these entitiesreceive pensions known as pensions outside of social security. Since you payfica taxes to accumulate quarters of coverage or QCs and you need at leastten years of work to be fully vested paying fica taxes are essential for theprogram to work. Though you need fica taxes to receive SS they are notrequired to be eligible for Medicare. You can buy into Medicare to getMedicare.
When the federal government borrowed surplus payroll tax collections fromMedicare (1970-2008) and Social Security (1984-2012) to finance otherexpenditures, did the government have to pay market rate interest to theprogram trust funds?
SS and medicare etc are from a common pool. There are no separate boxes forsuch funds. There is also no box. USA creates money when it orders checks tobe sent and this money is created right then. It is an elaborate drama thatUSA borrows anything at all. It CREATES money whenever required.The monetary sovereigns do the same. Like India China Russia UK AustraliaCanada etc. those who have their own currency. Such nations are the solecreators of their money which is entirely in their control.The congress is allowed to play act all the time with debt limits etc andstop govts off and on for kabuki.Most other democracies do not have filibusters and such absurdities.It is good that govt pays interest also Vertical money. This also supportsthe people and high interest means high GDP. Any money spent by USA is createdby USA and can go to only “We the people” and that is just FINENormally created fiscal deficits are with no interest no principal to bereturned and no cost. It is all benefit. CostBenefit 0. What can be betterObviously people who clamor for “cut the deficit” are brainwashed
Does the Bernie Sander’s tax plan mathematically pay for Medicare for all?
Yes in my opinion. But I’m no economist. Just a nurse. Here are 2 majorreasons.First There will be millions who don’t use it at all. Huge millions that justsee a doctor once a year or something. Then millions who have some minorissues like asthma irritable bowel or something. A relatively small numberare expensively sick. Ie cancer paralysis transplants. By nationalizing youget rid of the notion that if you are healthy you don’t need health insurancewhich leads to only the sicker and older signing up. Larger pools lower thecost.Secondly and most important is that suddenly no one will be making moneyoff of the sick and health care. With possibly the exception of pharmaceuticalcompanies and medical equipment. This will save about 200 Billion a year oreven more. My 200 billion number comes from just the profit margin of themajor insurance players. There is even more savings with all the copays peoplewould no longer have to pay.Health care is not something people can decide they don’t need then beg forhelp when they suddenly get in a car accident or get cancer. Bernie’s plansafeguards against these people who wrongly believe they don’t need insuranceuntil they are expensively sick.All along the health care spectrum the free market forces upcharging byaround 300. So if that CT scan costs the hospital 200 to perform they willcharge the insurance company 900 knowing that they will get only a portion.Like 300. This up charging is out of control and the cause of these hugehealth care costs over the last ten to twenty years. Take away any need forprofits by hospitals as well as insurance companies and the upcharging stops.Things will cost much much less.
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