Technical Bulletins: Mandatory Medicare Coverage for Newly Hired State and Local Workers

This Technical Bulletin discusses a Budget Reconciliation Bill designed to reduce the federal budget deficit by raising eighteen (18) billion dollars in the next three (3) years. The reconciliation legislation included a provision that required all state and local government employees hired after April 1, 1986 to be covered by the Medicare portion of the Social Security Tax. The new bill required both employers and employees to pay a tax of 1.45% on the first $42,000 of income earned by an employee.

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