What is FED MED/EE Tax?


If you have ever wondered how certain government programs are funded, then sometimes all you have to do is look at your paycheck stub. Nearly every taxpayer sees a line item deduction on their paycheck stub for Fed MED/EE tax, but very few actually know what it means. This is a deduction that is used to pay for one of the largest government-run health insurance programs in the country and it is something that every American can eventually benefit from.

What Is The Fed MED/EE Tax?

The Fed MED/EE tax stands for Federal Medicare/Employer-Employee tax and it is used to fund the federal Medicare insurance program. Every American is allowed to access the Medicare health insurance program, which includes many basic services for free. While there are parts of Medicare that the subscriber must pay for, services such as hospitalization and emergency services are covered by the Fed MED/EE tax.

Does Everyone Pay The Fed MED/EE Tax?

This tax is deducted in the same way as an income tax, but it is not used when calculating the taxpayer’s federal return. Every American taxpayer is required to pay the Fed MED/EE tax, unless they offer a qualified exception. If you are part of a religion that does not believe in health insurance, then you can petition the IRS to be exempt from the Fed MED/EE tax.

The list of accepted exemptions is extremely short and the IRS has not added to that list in a very long time. If you feel that you qualify for an exemption, then you must contact the IRS and file the proper forms. When your exemption is approved, you can submit it to your employer to adjust your withholding amount.

How Much Is The Tax?

The total amount of the Fed MED/EE tax is 2.9 percent of gross pay. For people who are employed by a company, the employee pays half of the tax and the company pays the other. If you are self-employed, then you pay the entire 2.9 percent on your own. The good news is that self-employed people can write off half of the Fed MED/EE tax as a business expense.

There are very few federal government programs that get funded directly out of your paycheck. The most common program is the federal Medicare health program. It is available to any American who has paid the tax throughout their life after they turn 65 years old. If you sought and got an exemption from paying the Fed MED/EE tax, then you will not have access to the Medicare health insurance program in your later years.