Medicare Withholding Limits

Medicare, the public health insurance program for senior citizens, draws its main funding from Medicare taxes that you pay when you work. Employers are required to withhold a percentage of your wages to pay these taxes. This withholding is subject to certain limitations.

Medicare Tax

• Medicare taxes fund the Medicare program, which provides hospital insurance, medical insurance, prescription drug coverage and additional coverage depending on the plan you pick. These taxes cover the taxpayer's Medicare Part A coverage, which is hospital insurance coverage provided to people 65 or older, those under 65 with certain disabilities, and people of any age with end-stage renal disease.

Medicare Tax Percentage

• As of 2011, employers are required to withhold 1.45 percent of your wages for Medicare. Your employer is required to pay an equal amount in addition to the amount withheld.

Medicare Wage Limits

• Unlike Social Security taxes that have a wage base limit of $108,600 in 2011, there is no limit for Medicare tax. This means that there is no limit on the amount of Medicare tax a person pays, whereas Social Security tax is collected only on the first $108,600 a person earns.

Original Medicare

• Original Medicare is the basic coverage provided by Medicare. It includes Medicare Part A and Medicare Part B. Medicare Part A helps you with hospital coverage. This coverage includes inpatient hospital care, home health care, skilled nursing facility services and hospice services. Although Medicare tax allows you to receive Medicare Part A for free, you must pay for other coverage. Medicare medical insurance is also known as Part B. Through Part B, you have coverage of doctor visit costs, preventive care costs and outpatient care and home health care services.

Medicare Options

• You can add additional coverage to your original Medicare coverage. Medicare Part C, known as Advantage Plans, includes the Part A and Part B plus extra coverage that varies by plan. This coverage may include hearing, vision and dental. The price you pay depends on the plan you choose. Medicare Part D provides prescription drug coverage. The exact coverage you have, deductibles you may pay and the plan's prices vary by plan and state.