What is the abbreviation for Medicare wages and the percentage withheld from employers and employees?

The abbreviation for Medicare wages is "HI," which stands for Hospital Insurance, a component of Medicare. The percentage withheld from both employers and employees for Medicare tax is 1.45%. This flat rate applies to all covered wages without a cap on earnings, meaning that all earnings are subject to this tax.

The structure of the Medicare tax is designed to ensure that funds are available to cover healthcare services for qualifying individuals, primarily those aged 65 and older, as well as certain younger individuals with disabilities or conditions requiring long-term care. Understanding these details is crucial for payroll professionals to ensure compliance with federal tax regulations and correct withholding from employee paychecks.