How much is deducted from social security for medicare

On 12 November, the Center for Medicare and Medicaid (CMM) released the 2022 premium prices and deductibles for Medicare Parts A and B.

Across the board, those on Medicare will pay more for their care. The price of the premium for Medicare Part B, which most members are required to pay, will increase fifteen percent from $148.50 to $171. This increase is almost triple the Social Security Cost-of-living adjustment (COLA) those on social security will see reflected in their benefits next year.

Medicare Part B

The premium for Medicare Part B is typically deducted from a person's social security check. However, since 2007, the premium paid for Part B is based on a person's total income. With most beneficiaries having an income under $91,000, most pay the standard price.

What are the Medicare Part B premiums for each income group?

File individual tax return File joint tax return File married & separate tax return Monthly Total 
2021 2022 2021 2022 2021 2022 2021 2022

$88,000 or less

$91,000 or less

$176,000 or less $182,000 or less $88,000 or less $91,000 or less $148.50 $170
$88,000 to $111,000  $91,000 to $114,000 $176,000 to $222,000  $182,000 to $228,000 N/A N/A $207.90 $238.10
$111,000 to $138,000  $114,000 to $142,000 $222,000 to $276,000  $228,000 to $284,000 N/A N/A $297.00 $340.20
$138,000 to $165,000  $142,000 to $170,000 $276,000 to $330,000  $284,000 to $340,000 N/A N/A $386.10 $442.30
$165,000 to $500,000 $170,000 to $500,000 $330,000 to $750,000  $340,000 to $750,000 $88,000 and less than $412,000  $91,000 and less than $409,000 $475,20 $544.30
$500,000 and up $500,000 and up $750,000 and up $750,000 and up $412,000 and above $409,000 and above $504.90 $578.30

Source: Medicare.gov

In 2021, based on the average social security benefit of $1,514, a beneficiary paid around 9.8 percent of their income for the Part B premium. Next year, that figure will increase to 10.6 percent.

This means that the average beneficiary will see never see ten percent of their total income, before accounting for the other health care costs they may have to pay throughout the year.

Deductible increases

In addition to premiums, the CMM also announced an increase to the Part B deductible.

The deductable refers to the amount a member is expected to pay before their coverage kicks in.

The deductible will increase from $203 to $230 in 2022. After the deductible has been reached, members will be required to pay twenty percent of the costs for various services including, most doctor services, outpatient therapy, and medical equipment.

What is causing the increase in costs?

The CMM provided a series of reasons as to why the price is increasing.

The first is that each year based on the continuous increase in the costs of providing health care. Each year, the premium increases a small amount to reflect this market-wide trend. However, from 2020 to 2021, the price only increased two percent, whereas from 2021 to 2022 it will be more than fifteen percent.

Another reason relates to Congressional action to lower the cost of premiums in 2021, "which resulted in the $3.00 per beneficiary per month increase in the Medicare Part B premium (that would have ended in 2021) being continued through 2025."

Medicare Part A

Ninety-nine percent of Medicare members do not pay a premium for Part A. For the few that do purchase Part A coverage, it will cost $499 next year.

Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Different rates apply for these taxes.

Social Security and Medicare Withholding Rates

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Refer to Publication 15, (Circular E), Employer's Tax Guide for more information; or Publication 51, (Circular A), Agricultural Employer’s Tax Guide for agricultural employers. Refer to Notice 2020-65PDF and Notice 2021-11PDF for information allowing employers to defer withholding and payment of the employee's share of Social Security taxes of certain employees.

Additional Medicare Tax Withholding Rate

Additional Medicare Tax applies to an individual's Medicare wages that exceed a threshold amount based on the taxpayer's filing status. Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual's wages paid in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. There's no employer match for Additional Medicare Tax. For more information, see the Instructions for Form 8959 and Questions and Answers for the Additional Medicare Tax.

Wage Base Limits

Only the social security tax has a wage base limit. The wage base limit is the maximum wage that's subject to the tax for that year. For earnings in 2022, this base is $147,000. Refer to "What's New" in Publication 15 for the current wage limit for social security wages; or Publication 51 for agricultural employers.

There's no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.