The “Med EE” line on your paycheck is the Medicare employee tax, your share of the Federal Insurance Contributions Act (FICA) tax that funds Medicare. It equals 1.45% of your gross taxable wages for the pay period, and it applies to every dollar you earn with no income cap.1Office of the Law Revision Counsel. 26 USC Ch. 21 Federal Insurance Contributions Act If you earn more than $200,000 from a single job in a calendar year, your employer begins withholding an extra 0.9% on wages above that line, bringing your rate on the excess to 2.35%.
Where the Money Goes
The 1.45% flows into the Medicare Hospital Insurance Trust Fund, which pays for Medicare Part A: inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. The program currently covers roughly 67 million Americans.
Paying the tax also builds your own eligibility. Once you or your spouse accumulate 40 calendar quarters of work (about ten years) paying into the system, you qualify for premium-free Part A at 65. If you fall short, you can still enroll, but you’ll pay a monthly premium that in 2026 runs as high as $565 for people with fewer than 30 quarters of covered work.
How the 1.45% Is Calculated on Your Check
Your employer applies the flat 1.45% to your gross taxable wages each pay period. The math is simple: on a $3,000 biweekly paycheck, Medicare withholding comes to $3,000 × 0.0145 = $43.50. That’s the number next to “Med EE.”
Your Form W-4 doesn’t change this. The W-4 controls federal income tax withholding only. FICA taxes, including Medicare, are a flat percentage of wages that your employer must withhold regardless of what you claim on the W-4.2Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate
Medicare also behaves differently from Social Security tax. Social Security only applies to the first $184,500 of wages in 2026. Medicare has no cap, so someone earning $300,000 pays Medicare tax on the entire $300,000 but Social Security tax on only the first $184,500.3Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
What Reduces Medicare Wages, and What Doesn’t
Not every dollar of gross pay is subject to Medicare tax. Deductions you take through a Section 125 cafeteria plan — typically health insurance premiums, a health flexible spending account (FSA), and a dependent care FSA — come out before Medicare tax is calculated.4Internal Revenue Service. FAQs for Government Entities Regarding Cafeteria Plans If $200 per paycheck goes to employer-sponsored health insurance through a cafeteria plan, you pay Medicare tax on your pay minus that $200.
Traditional 401(k) contributions do not get the same treatment. Pre-tax 401(k) deferrals reduce your federal income tax but do not reduce your Medicare wages. You still owe 1.45% on every dollar you defer.5Internal Revenue Service. Retirement Plan FAQs Regarding Contributions This is why the Medicare wages on your W-2 (Box 5) usually come in higher than your federal taxable wages (Box 1).
The Extra 0.9% for High Earners
Once your earned income passes certain filing-status thresholds, you owe an Additional Medicare Tax of 0.9% on the amount above the line. That raises your employee-side rate to 2.35% on the excess.6Internal Revenue Service. Questions and Answers for the Additional Medicare Tax The thresholds were set by statute in 2013 and are not adjusted for inflation:
- Single or head of household: $200,000
- Married filing jointly: $250,000 combined wages and self-employment income
- Married filing separately: $125,000
Why Your Withholding Can Be Wrong
Your employer must start withholding the extra 0.9% once your wages from that job exceed $200,000 in a year, no matter your filing status and no matter what your spouse earns.6Internal Revenue Service. Questions and Answers for the Additional Medicare Tax That rigid trigger creates two common mismatches.
If you’re married filing jointly and each spouse earns under $200,000 but your combined wages top $250,000, no employer will withhold the extra tax, yet you’ll owe it when you file. You can cover the gap with quarterly estimated payments or extra federal income tax withholding on your W-4.
The reverse happens too. If you earn $220,000 and your spouse earns nothing, your employer will withhold the 0.9% on the $20,000 over $200,000, but because your household is well below the $250,000 joint threshold, you don’t actually owe it. You reconcile on Form 8959, filed with your Form 1040, and get the overpayment credited back.7Internal Revenue Service. About Form 8959, Additional Medicare Tax
Your Employer Pays a Matching 1.45%
On top of your 1.45%, your employer pays its own matching 1.45% out of its own pocket, bringing total Medicare contributions on your wages to 2.9%.8Office of the Law Revision Counsel. 26 USC 3111 – Rate of Tax The employer share never appears on your pay stub and is not deducted from your pay. There is no employer match on the 0.9% Additional Medicare Tax; even when your rate hits 2.35%, your employer’s share stays at 1.45%.
If You Also Have Self-Employment Income
Self-employed workers pay both halves themselves, for a Medicare rate of 2.9% of net self-employment income, reported on Schedule SE. You can deduct half of your total self-employment tax as an above-the-line adjustment on Schedule 1 of Form 1040, which reduces your adjusted gross income (though not the self-employment tax itself).
The 0.9% Additional Medicare Tax applies to self-employment income using the same thresholds, and if you have both wages and self-employment income, the two are combined to see whether you’ve crossed the line.9Internal Revenue Service. Topic No. 560, Additional Medicare Tax A single filer with $150,000 in wages and $100,000 in net self-employment income has $250,000 in combined income and owes the extra tax on the $50,000 above $200,000.
Who Doesn’t Pay Medicare Tax
Exemptions are narrow. Students enrolled and regularly attending classes at a college or university who work for that same school may have their wages exempt from FICA, as long as the job is incidental to their studies; the exception doesn’t cover professional employees or postdoctoral researchers.10Internal Revenue Service. Student FICA Exception Members of certain recognized religious sects with established teachings against insurance benefits can apply for an exemption using IRS Form 4029. And some state and local government workers hired before April 1, 1986, and continuously employed since then under a qualifying public retirement system remain exempt from mandatory Medicare tax; anyone hired after that date is covered.11Internal Revenue Service. State and Local Government Employees Social Security and Medicare Coverage If “Med EE” shows up on your stub, you almost certainly aren’t exempt.
Checking the Number on Your Stub and W-2
Look for a line labeled Med EE, Medicare, or EE Med. Take your gross wages for the period, subtract any cafeteria plan deductions, and multiply by 0.0145. If the result is lower than what was withheld, your year-to-date wages have probably crossed $200,000 and your employer has started the extra 0.9%.
At year end, your W-2 ties it together. Box 5 reports total Medicare wages and tips, and Box 6 reports total Medicare tax withheld, including any Additional Medicare Tax. Box 5 is often larger than Box 1 because 401(k) deferrals and other pre-tax items reduce Box 1 but not Box 5. Box 5 can also exceed Box 3 (Social Security wages) because Social Security is capped at $184,500 while Medicare has no cap.12Internal Revenue Service. General Instructions for Forms W-2 and W-3 (2026)
Before filing, compare the cumulative Medicare withholding on your final pay stub to Box 6. If they don’t line up, call your employer’s payroll department. A quiet error here can mean you overpay at filing or get flagged for underpayment later.