What is FICA Matching with Short-Term Disability Insurance?

FICA (Federal Insurance Contributions Act) matching with short-term disability (STD) refers to the employer’s responsibility to match Social Security and Medicare taxes on taxable short-term disability benefits.

Here’s how it works:

• If the STD benefits are employer-paid:

  • The benefits are subject to FICA taxes (Social Security and Medicare).
  • The employer must withhold the employee’s share and also match the Social Security (6.2%) and Medicare (1.45%) taxes.
  • If the employee earns above the Social Security wage base, only Medicare tax (1.45% + 0.9% for high earners) applies.

• If the STD benefits are employee-paid (with post-tax dollars):

  • The benefits are NOT subject to FICA taxes, and no employer matching is required.

Example:

• If an employee receives $1,000 in taxable short-term disability benefits:
  • Employee’s FICA tax: $76.50 (6.2% Social Security + 1.45% Medicare)
  • Employer’s FICA match: $76.50
  • Total FICA taxes paid: $153

Employers are responsible for ensuring proper tax withholding and reporting for short-term disability payments. If the employer uses a third-party insurance provider to pay benefits, tax responsibilities might shift, but FICA rules still apply.