What Is FHI Tax?

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FHI tax is directly related to Medicare tax that is taken out of your paycheck. Find out about FHI tax with help from a CPA, attorney, national speaker and best-selling author in this free video clip.

Part of the Video Series: Tax Advice & Tips
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Video Transcript

Hi, Mark Kohler here. Lets talk about the FHI tax. Now it sounds a little odd but you may see that on your paystub and basically that's the Federal Health Insurance deduction or Medicare. Some of you may have heard of FICA which is a combination of Social Security and Medicare but the Medicare portion on a lot of paystubs is sometimes gonna be abbreviated to mean FHI. It's a total of 2.9 percent. Now if it's an employee you pay 1.45 and then the employer matches the other half and that's where the 2.9 comes from. Now a couple other points that might be of interest to you. First of all if you're self-employed you're gonna pay the entire 2.9 percent under the self employment tax which is 15.3 percent so that's a combination of Social Security and Medicare times 2 and as a small business owner you're gonna end up paying that entire amount. This is where the S Corporation strategy that's extremely powerful can be used for the entrepreneur or sole proprietor that's paying way too much in SE Tax but that's where that FHI is gonna play out for an entrepreneur and the final point I'd make is the Affordable Healthcare Act - ObamaCare which comes into play with another layer of this kind of healthcare tax and it's different than FHI but that's going to be the ObamaCare tax that starts to kick in on payroll. If you make over 200 grand single or 250 grand married. Now again that's another moving target. lots of rules are constantly changing in the ObamaCare world but hopefully that helps to answer your question about FHI continue to do a little bit of research and look at constant updates of how those numbers can change.


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