The Medicare health insurance program was first signed into law on July 30, 1965, while Social Security was signed into law by President Franklin Roosevelt on Aug. 14, 1935. According to the Social Security website, age 65 was chosen as the age for benefits because it conformed to practices during the 1930s.
Medicare is a government health insurance program for the people over the age of 65, or people under age 65 with disabilities. Medicare is divided into four parts:
Part A is hospital insurance that most people do not pay monthly payments on.
Part B is medical insurance that usually involves a monthly payment.
Part C is Medicare Advantage. This plan, which is for people who have plans A and B, covers what most Medigap insurance policies would cover, such as extra days spent in a hospital.
Part D helps pay for drug prescriptions.
Medicare Tax Rate
While employed, you are required to have Medicare taxes withheld from your earnings. The employer must match this amount, and both amounts are forwarded to the Social Security Administration. Unlike Social Security taxes, Medicare taxes do not have a limit on the amount of wages, so all wages are subject to Medicare tax.
In 2010, the Medicare tax rate was 1.45 percent of a person's total earnings.
Self-Employed Medicare Rate
For people who are self-employed, the Medicare tax rate is calculated at 2.9 percent of their total income. As of 2010, the total self-employment tax rate stood at 15.3 percent, including 12.4 percent for Social Security.
- tax forms image by Chad McDermott from Fotolia.com