6.5A Social Security and Medicare

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Presentation transcript:

6.5A Social Security and Medicare

Vocabulary 1. An insurance program is available jointly through your employer and the United States Government, this insurance is called SOCIAL SECURITY. President Franklin D. Roosevelt started Social Security in 1935. It was established in the FEDERAL INSURANCE CONTRIBUTIONS ACT (FICA). When you work at a job covered by social security, you must pay FICA TAXES.

Vocabulary 4. Both SOCIAL SECURITY TAX and MEDICARE TAX fall under this category. 5. The amount of Social Security tax you pay depends on the Social Security percentage and the MAXIMUM TAXABLE INCOME for that year. 6. The government keeps records of the amounts that you have paid to Social Security and Medicare under your own SOCIAL SECURITY NUMBER. This is a unique nine digit number that only belongs to you.

Example 1 Ramiro got his first job in 2006. In that year, Social Security tax was 6.2% of income up to $94,200. Medicare tax was 1.45%. If Ramiro earned $73,210 in 2006, how much did he pay for Social Security and Medicare taxes?

Example 2 Express the Social Security tax for 2006 as a piecewise function.

Example 3 In 1990, Jerry’s gross pay was $78,000. A. What was his monthly gross pay? B. In what month did Jerry hit the maximum taxable Social Security income? C. How much Social Security tax did Jerry pay in January? D. How much Social Security tax did Jerry pay in December?

Example 4 In 1978, Dawn earned $48,000. A.What was her monthly gross pay? B. In what month did Dawn reach the maximum taxable Social Security income? C. How much Social Security tax did Dawn pay in February?

Example 4 Continued D. How much Social Security tax did Dawn pay in May? E. How much Social Security tax did Dawn pay in November?

Example 5 In 1988, Social Security tax was 7.51%, to the maximum income of $45,000. If Grace earned $51,211 in 1988, how much Social Security did she pay?