What Is MED FICA?

MED is short for Medicare, while FICA stands for Federal Insurance Contribution Act.

•   Tax terms

These are tax terms used to determine the deduction one pays for social security benefits for the elderly or disable person. MED is a Medicare deduction. FICA is coded as Title 26, Subtitle C, Chapter 21 of the United States Code.

FICA is considered a regressive tax; meaning it has no standard deduction or personal exemption deduction. It is imposed on the first $106,000 of gross wages. The tax is not imposed on investment income.

•   Use an accountant

It is best to have an accountant do the actual calculation of FICA and MED if you have those deductions as the process can be fairly difficult to understand. It is far better to have your wages and taxes done by a professional than to be audited or found to need to pay more due to an error.

• The history of MED and FICA

Before the Great Depression there was nothing called a FICA or MED tax. It was after this difficult time that the US decided something needed to be done to help the employment community become stronger. There was also no disability insurance or income; so those that could not work anymore were left to suffer.

In the 1930s the New Deal started social security and thus FICA was born. It would take another 30 years for Medicare to be introduced and therefore for the MED tax and its deduction to appear. There has been a lot of debate on these two tax properties given that it is regressive. The tax rate decreases as income increases.

What you need to know is that it is part of taxes and it is something taken out of your checks when you earn a wage to help towards retirement or disability should that ever happen to you. It goes into a pooled account and works as a deduction on your tax forms.