If I am retired for the last 5 years, and I have Medicare, why do I still have to pay Medicare payroll deductions if I continue working?

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    Are you asking why medicare is still deducted from your paycheck? Why would it not be? – D Stanley Mar 6 '17 at 18:12
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    How can you be retired and still working? – jamesqf Mar 6 '17 at 18:46
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    Because Medicare payroll deductions are how Medicare is paid for. – David Schwartz Mar 6 '17 at 21:08
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    @Necoras: I think that is a misuse of the word "retired". They have stopped working at a particular job they used to have. They are still working. (However, you're right that they're often considered "retired" for the purposes of pensions and the like.) – BrenBarn Mar 7 '17 at 4:26
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    To avoid a penalty you have to enroll in Medicare at age 65. So it is not unusual to be employed and enrolled at the same time. – mhoran_psprep Mar 7 '17 at 11:40

This is something that many people misunderstand.

Nearly everyone who works in the U.S. is required to pay Social Security and Medicare taxes (sometimes called payroll taxes or FICA). These are not a savings plan, and the money you pay is not going into an account with your name on it. This money is used to pay for the benefits of the current retirees/beneficiaries. When you retire, the benefits you get will be paid for by the workers that are still working and paying that tax.

You may be receiving benefits, but you are also still working, so you still have to pay the tax.

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    Who is not required to pay SS? I thought, at this time, it is pretty much only clergy. My father was able to opt out as a postman, but I think that loophole disappeared long ago. – Pete B. Mar 6 '17 at 21:02
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    @PeteB. Amish and Mennonites are exempt. faq.ssa.gov/link/portal/34011/34019/Article/3821/… – ceejayoz Mar 6 '17 at 21:03
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    @PeteB. There are also some public sector employees (state and local) that have their own pension system and are exempted from SS. – Ben Miller - Remember Monica Mar 6 '17 at 21:17
  • @PeteB. - I got a new job a couple of years ago that has CalPERS instead of SS. – Hannover Fist Mar 6 '17 at 23:56
  • @Pete B There is some exception I don't fully understand for students. – Matt Mar 7 '17 at 3:09

The Medicare deduction you see is a tax, not a monthly premium you are paying for your own Medicare coverage.

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  • this is really a comment, not an answer – warren Mar 9 '17 at 18:47
  • It's just about an answer IMO, but it doesn't add anything to the existing highly voted answer. – GS - Apologise to Monica Mar 9 '17 at 19:25

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