What Is the MEDI Tax Deduction on My Paystub?

“MEDI” on your paystub represents the Medicare tax, a mandatory federal payroll deduction. This tax is a component of the Federal Insurance Contributions Act (FICA) taxes, which also include Social Security. Its purpose is to fund the Medicare program, a federal health insurance initiative.

Medicare Tax on Your Paystub

The Medicare tax withheld from your earnings is a federal obligation. Medicare is a government health insurance program primarily serving individuals aged 65 or older, and certain younger people with disabilities. The standard employee Medicare tax rate is 1.45% of all earned wages. Unlike Social Security, there is no wage base limit for this tax, meaning all taxable income is subject to this deduction.

This specific deduction appearing on your paystub directly contributes to the Medicare Hospital Insurance (HI) Trust Fund. These funds are used to pay for inpatient hospital care, skilled nursing facility care, hospice care, and some home health services for eligible beneficiaries. The consistent withholding ensures a steady stream of revenue for this critical component of the Medicare program.

Additional Medicare Tax

Beyond the standard Medicare tax, some individuals are subject to an Additional Medicare Tax. This is a separate 0.9% tax applied to earned income that exceeds certain thresholds. The income thresholds for this additional tax vary based on your tax filing status. For single filers, the threshold is $200,000, while for those married filing jointly, it is $250,000. Married individuals filing separately face a threshold of $125,000.

This Additional Medicare Tax is solely the employee’s responsibility and is not matched by the employer. For example, if a single filer earns $220,000, the 0.9% additional tax would apply to the $20,000 earned above the $200,000 threshold. Employers are required to begin withholding this additional tax once an employee’s wages exceed $200,000 in a calendar year, regardless of filing status.

Understanding Contributions

The Medicare tax is funded through contributions from both employees and employers. For the standard Medicare tax, employers also contribute 1.45% of an employee’s wages, matching the employee’s deduction. This means a total of 2.9% of your wages is directed towards Medicare through these combined contributions.

Self-employed individuals bear the full responsibility for both the employee and employer portions of Medicare tax. This combined amount totals 2.9% of their net earnings from self-employment. This is paid through self-employment tax, which also includes Social Security contributions. Self-employed individuals may also be subject to the 0.9% Additional Medicare Tax if their income surpasses the established thresholds.

Paystub Appearance and Purpose

The Medicare tax typically appears on your paystub under various abbreviations. Common labels include “MEDI,” “Medicare,” “Med,” or “MCR.” Regardless of the specific label, this deduction represents your mandatory contribution to the federal Medicare program. It signifies your share in funding a national healthcare system for eligible individuals.

It is important to recognize that this deduction is not a direct premium for immediate personal health insurance coverage. Instead, it is a payroll tax that funds the program for current and future beneficiaries, ensuring its long-term viability. This withholding is required by law, making it a non-negotiable part of your payroll deductions. Reviewing this line on your paystub helps you verify the correct withholding and understand your contribution to this federal program.