Overview: Medicare is a federal health insurance program that covers individuals age 65 or over, disabled workers under age 65 and individuals with end-stage renal disease. The Medicare program is funded by taxes paid by both the employee and the employer and is calculated as a percentage of salary with no annual maximum.
Medicare is made up of four programs:
Eligibility for Medicare benefits begins at age 65. Employees that work past age 65 are still eligible for Medicare. If an active employee is covered under both Medicare and the employer's group health plan, the group health plan is considered the primary health plan. For retirees, Medicare is considered the primary insurance and any coverage under an employer's health plan is secondary.
Trends: Medicare is one of the most expensive government programs. With baby boomers reaching retirement age, enrollment is expected to be 80 million people by 2030. The debate continues as to how to control Medicare spending so that the program will be around for future generations.
Author: Tracy Morley, SPHR, Legal Editor
Updated to reflect 2018 FICA tax rates and benefit amounts.
This Worked Example illustrates how employers should calculate an employee's total FICA withholding for each pay period.
This section helps HR professionals understand obligations related to certain statutory benefits such as Social Security and Medicare and unemployment insurance.
Employment glossary definition of Medicare.
Employment glossary definition of MSA.
Employment glossary definition of PDP (Prescription Drug Plan).
HR guidance on federal Medicare plan options for employees.