There is no single “social insurance” bundle in the US
Korea groups its national pension, health insurance, employment insurance and industrial accident insurance into one bundle. In the US, each program has its own name and its own administrator. The only social insurance the federal government collects directly from wages is Social Security (officially OASDI: old-age, survivors and disability insurance) and Medicare hospital insurance. Together they are called FICA taxes, after the Federal Insurance Contributions Act.
Unemployment insurance is a joint federal (FUTA) and state (SUTA) system that is mostly paid by employers. Workers’ compensation is required by state law, and employers buy it from private insurers or state funds. Employer health coverage is not a payroll tax at all; it is a job benefit, so premiums vary by employer and plan.
- Taken out of your pay: Social Security 6.2%, Medicare 1.45% (plus 0.9% on high earnings), disability or family leave premiums in some states, and federal and state income tax withholding
- Paid only by your employer: The matching employer share of Social Security and Medicare, federal and state unemployment taxes, and workers’ compensation
2026 FICA rates and the wage base
Employees and employers pay FICA at the same rates. Social Security stops at an annual wage cap; Medicare has no cap.
Once your pay for the year passes $184,500, Social Security stops coming out for the rest of the year. The most any one employee pays is $11,439 ($184,500 × 6.2%). If you worked for two or more employers in the same year and the combined withholding went over the cap, you get the excess employee share back when you file Form 1040. The employer share is not refunded.
The 0.9% Additional Medicare Tax applies to wages and self-employment income above $200,000 for single filers, $250,000 for married couples filing jointly and $125,000 for married filing separately. Employers must start withholding it once your wages from them pass $200,000, regardless of filing status, and any difference is settled on your return. These thresholds are not indexed for inflation.
Employee FICA = min(wages, 184,500) × 6.2% + wages × 1.45% + max(0, wages − 200,000) × 0.9% Example: $90,000 salary → 90,000 × 7.65% = $6,885 (your employer pays another $6,885)
| Tax | Employee | Employer | Wages taxed (2026) |
|---|---|---|---|
| Social Security (OASDI) | 6.2% | 6.2% | Up to $184,500 a year |
| Medicare (HI) | 1.45% | 1.45% | No limit |
| Additional Medicare Tax | 0.9% | None | Wages over $200,000 (employer withholding threshold) |
| Self-employment tax | 15.3% (you pay both halves) | N/A | 92.35% of net earnings; the Social Security part stops at $184,500 |
Sources: SSA (wage base), IRS Topics 751 and 560. In October 2026 SSA announced a 2027 wage base of $192,300.
Self-employment tax for freelancers
Freelancers paid on a 1099 and sole proprietors have no employer, so they pay both the employee and employer shares. This is self-employment tax: 15.3% (12.4% Social Security plus 2.9% Medicare) on 92.35% of net earnings. If your net earnings are $400 or more, you report it on Schedule SE.
Half of your self-employment tax (the employer-equivalent portion) is deductible when figuring income tax. Because nothing is withheld, most self-employed people make quarterly estimated payments with Form 1040-ES, and underpaying can trigger a penalty.
If you have a W-2 job and a side business, your wages fill up the Social Security wage base first, and the 12.4% applies to self-employment income only up to whatever room is left. The 2.9% Medicare portion has no cap.
Unemployment insurance and workers’ comp: paid by employers
- Federal unemployment tax (FUTA): 6.0% on the first $7,000 of each employee’s wages. Employers that pay state unemployment tax on time get a credit of up to 5.4%, so the usual net rate is 0.6% (at most $42 per employee). The credit shrinks in states that have not repaid federal loans; for 2025, California’s was cut by 1.2 percentage points.
- State unemployment tax (SUTA): Each state sets its own rates and taxable wage base, using experience rating: employers with more layoffs pay higher rates. Employees also chip in a small amount in Alaska, New Jersey and Pennsylvania.
- Unemployment benefits: Workers who lose their jobs through no fault of their own apply to their state agency. Benefit amounts and durations vary; many states pay for up to about 26 weeks and some for less. Benefits are subject to federal income tax.
- Workers’ compensation: Mandatory for employers in almost every state (Texas lets employers opt out). Premiums depend on industry and claims history and are paid entirely by the employer. Injured workers receive medical care and wage replacement, and in exchange generally cannot sue the employer.
State disability insurance and paid family leave
California, New York, New Jersey, Hawaii and Rhode Island (plus Puerto Rico) require short-term disability insurance (SDI or TDI) that replaces part of your pay when an illness or injury outside work keeps you from working. A growing list of states, including Washington, Massachusetts, Connecticut, Oregon and Colorado, also collects premiums for paid family and medical leave (PFML).
As a rule, the program of the state where you work applies, not the state where you live. Rates change every year, so check your state labor agency.
- California SDI: 1.3% of wages for employees in 2026, with no wage cap since 2024. It also funds California Paid Family Leave.
- New York DBL and PFL: Disability benefits (DBL): employees pay 0.5% of wages, up to $0.60 a week. Paid Family Leave: 0.432% of wages in 2026, up to $411.91 a year, paid by employees.
Employer health coverage and Social Security benefits
The US has no universal national health insurance. Under the Affordable Care Act, employers with 50 or more full-time-equivalent employees may owe a penalty if they do not offer affordable coverage to full-time staff, so most offer group health plans and split the premium with employees. Your share is usually deducted pre-tax through a Section 125 plan, which lowers both income tax and FICA. Without employer coverage, you can buy a plan on an ACA Marketplace such as HealthCare.gov.
To qualify for Social Security retirement benefits, you need 40 credits, which usually means about 10 years of work. In 2026 you earn one credit for every $1,890 of earnings, up to four a year. Your benefit is based on your highest 35 years of earnings, indexed to national average wage growth; the maximum for someone starting at full retirement age in 2026 is $4,152 a month. The same taxes also fund disability and survivor benefits.
Medicare starts at 65. With 40 credits, hospital insurance (Part A) is premium-free; the standard Part B premium for 2026 is $202.90 a month.
How it compares with Korea’s four social insurances
The US and Korea have a Social Security agreement (in force since 2001). Workers sent to the US by a Korean employer for five years or less can, with a certificate of coverage, keep paying only into Korea’s National Pension and be exempt from US Social Security and Medicare taxes. Credits earned in both countries can also be combined to qualify for benefits.
| Korea | United States | Who pays in the US |
|---|---|---|
| National Pension 9.5% (employee 4.75%) | Social Security 12.4% (employee 6.2%) | Split evenly |
| National Health Insurance and long-term care | Employer group health plans (not a statutory program) + Medicare from 65 | Varies by plan / Medicare tax split evenly |
| Employment insurance | State unemployment insurance (SUTA) + federal FUTA | Mostly employers |
| Industrial accident insurance | Workers’ compensation | Employers only |
FAQ
Do F-1 students pay FICA?
Students and scholars on F-1 or J-1 visas who are nonresident aliens for tax purposes are generally exempt from FICA on work allowed by their visa, such as on-campus jobs or OPT. The exemption ends once you become a resident for tax purposes, so confirm with your payroll department.
Does contributing to a 401(k) lower my FICA?
No. Traditional 401(k) contributions reduce federal taxable income, but they still count as wages for Social Security and Medicare. Health premiums paid through a Section 125 plan reduce both.
I changed jobs and paid more Social Security than the cap.
If the combined withholding from several employers exceeded the cap, you claim the excess on Form 1040 (Schedule 3). If a single employer withheld too much, ask that employer to correct it.
Can non-citizens collect Social Security?
Yes, if you meet the requirements such as 40 credits, regardless of citizenship, and under the US–Korea agreement you can keep receiving benefits while living in Korea. If you have fewer than 40 credits but at least six US credits, your Korean pension coverage can be counted toward eligibility.
Basis and sources
- SSA — Contribution and Benefit Base
- SSA — 2027 COLA Fact Sheet (2026 and 2027 figures)
- IRS Topic 751 — Social Security and Medicare Withholding Rates
- IRS Topic 560 — Additional Medicare Tax
- IRS — Self-Employment Tax
- IRS Topic 759 — FUTA Tax Return (Form 940)
- U.S. Department of Labor — Unemployment Insurance
- U.S. Department of Labor — Workers’ Compensation
- California EDD — 2026 SDI Rates
- New York State Paid Family Leave
- SSA — Social Security Credits
- SSA — U.S.–Korea Social Security Agreement
- SSA POMS GN 01701.110 — Eligibility for U.S. Totalization Benefits (at least 6 U.S. credits)
- Medicare.gov — Medicare Costs