FICA (Federal Insurance Contributions Act)

FICA, or the Federal Insurance Contributions Act, is a U.S. law that funds Social Security and Medicare programs. Employees and employers each pay a percentage of wages towards these programs through payroll taxes. Social Security provides benefits for retirees, disabled individuals, and survivors, while Medicare offers health coverage for people aged 65 and older and certain younger individuals with disabilities. FICA taxes help ensure that these essential social safety nets continue to support millions of Americans in need of financial and health assistance.