This article endeavors to show how current Medicare and Social Security recipients are being duped by both political parties. It would be wise for the generations currently supporting these programs to pay close attention to the facts in this article.
Currently, there are 107,800,000 taxpayers in the 15% federal income tax bracket and 27,000,000 in the 10% bracket, for a total of 134,800,000 taxpayers. The 10% bracket is for those earning less than $23,200 a year, and the 15% bracket covers those between $23,2001 and $94,300.
There are 24,000,000 taxpayers in the 25% bracket earning between $383,000 and $487,500 annually, and 892,420 in the top tier earning an average of $731,201 for a total of 23,892,420 tax income taxpayers.
This information is important to illustrate how the minority wealthy elite are using our politicians to dupe the vast majority of American citizens. Both sides of the political aisle are complicit in this flimflam, and they do it in plain sight. The problem is they keep us looking in the wrong direction.
Social security is supported by the Federal Insurance Contribution Act (FICA) tax on wages. The employee pays 6.2% of their paycheck, and their employer pays 6.2%, which is a total of 12.4%. There is a cap on the wage level FICA is applied to; for 2025, the cap is $176,100. Beyond this cap, no social security FICA tax is collected. This means that everyone in the 10% and 15% Federal tax brackets pay 12.4% of their wages into SSN FICA and wage earners above the cap pay a reduced percentage of their wages as their wage level increases. The following graph illustrates this inequity.
If the FICA cap of $176,100 were removed, everyone would pay 12.4% of their wages, and the graph would look like this.
In actuality, if the cap were removed, the percentage of wages taxed would be reduced since the 12.4% FICA would now produce approximately an additional 1 trillion dollars in revenue. Lowering the FICA would put more money into the folks in the 10 and 15% tax brackets paychecks instead of reducing the benefits for our senior citizens relying on their social security checks to keep their heads above water.
Remember, FICA is a tax on wages, not earnings. This is important because many of the rich elite find ways to take some of their compensation via stock options, cryptocurrency, and other non-wage methods. This issue would need to be accounted for, and proper mechanisms should be put in place to prevent improper tax avoidance.
The next con being perpetrated on our seniors is the government's clawback of social security payments to support Medicare. This clawback comes in two forms: the base Medicare premium of $185 in 2025 and the Income-Related Monthly Adjustment Assessment (IRMAA) reducing your monthly social security payment.
The medicare component of FICA is 1.45% for the employee and the same for the employer for a total of 2.9%. Why are we asking our retirees to pay a premium for the Medicare system they supported their entire working lives?
There are a number of ways to fix this problem, not the least of which is Medicare for all, which would reduce the cost of healthcare by over 1 trillion dollars. Medicare for all would also eliminate other costly State and Federal insurance programs like Medicaid since every citizen would have Medicare. Medicare for all would eliminate the current private insurance and health CASTE system which puts profits ahead of quality. We could also tweak the 1.45% FICA, but Medicare for all is the best cost-saving alternative.
The last issue to be explained is the Income-Related Monthly Adjustment Amount, which is actually a tax on the social security money you were taxed to pay the Federal government in the form of FICA and are now receiving as your monthly social security payment. If this sounds confusing, it is because it is the weirdest flimflam I have ever seen. In this case, IRMAA deductions from your social security payment are based on your current income stream. Since you aren’t receiving wages, our good ole boys in Congress decided to tax your (through IRMAA) savings and your personal retirement funds, ex. IRAs, 401Ks, Annuities, etc.
If your income from your nest egg is above a certain amount (refer to the table below), your Social Security monthly payment will be reduced by increasing amounts and supposedly given to the Medicare fund. Now stop and think about this for a minute: you are not receiving an enhanced Medicare product for the money being clawed back by Social Security. You are getting the exact same product as everyone else but paying more. As bad as private insurance is, have you ever heard of fellow employees paying more from their paychecks for the same insurance plan? Have you ever heard of two people ordering the same meal and one paying more because they have a higher income?
To make things even worse, you will notice there are two columns: one for IRMAA clawback for Part B Medicare and one for a Part D plan. The part D plan is a pharmacy coverage plan that is offered by private insurance companies. Federal funds are not expended to pay for any of the benefits of a Part D plan. The following is the explanation given for the IRMAA part D plan money clawback by the government.
“The income-related monthly adjustment amount (IRMAA) applies to Medicare Part D because it's a surcharge that helps cover the costs of Medicare for higher-income individuals, regardless of whether the coverage is provided by a private insurance company:”
In other words, we do it because we can. How does the explanation make any sense to “cover the costs of Medicare for higher-income individuals”? Does this mean they aren’t paying their fare share? Everyone gets the same product.
The cost of caring for a population is shared by each person in the insured population. When a homogeneous grouping occurs, the risks and costs per individual may increase or decrease dramatically. The following data from the Kaiser Family Foundation illustrates the difference in per capita healthcare spending in 2019 by age group; 0-18 $2,426, 19-34 $3,484, 35-44 $4,694, 45-54 $6,734, 55-64 $10,203 and 65+ $13,016.
There are 245 million persons below the age of 65 with health insurance and 44 million 65 or older on Medicare. When these two populations are combined, the weighted average for healthcare spending becomes $5,800 per capita. When the politicians cry about the high cost of Medicare and the need for reform, they are being disingenuous at best.
With Medicare for All, you level the healthcare playing field and spread the cost over a huge, diverse population. With Medicare for All, you have a single-payer system that will have the power to lower the overall cost of healthcare and improve the quality of care provided. The US healthcare system's costs per capita are twice as much as those of any other developed nation, while it ranks 37th for quality of care, according to the World Health Organization.
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ml.chickp
In this time of misinformation and disinformation it would be helpful to know Mr. Fusco's credentials with citations for sources of information given. I'd love to pass this very concise, understandable, and well written piece on to others. I just wish it was also well documented. Thanks.
Wednesday, January 22 Report this
Charlene
This is common sense. Thank you for putting it so eloquently. Get rid of the cap.
Wednesday, January 22 Report this
rayfusco68
ml.chickp,
To answer your questions, I have the following degrees; BS Health Education, Masters of Health Education, RN degree, Masters of Business Administration. I worked in healthcare for nearly 50 years as a RN, Vice President of Hospital operations, CEO of a hospital, Chief Operating Officer for one of the largest Federally Qualified Health Centers, Founder and CEO of an Accountable Care Organization covering five counties in Florida. All of the sources in the article are easily verifiable, by an internet search.
Thursday, January 23 Report this