What is the Federal Insurance Contributions Act?
In accordance with the Federal Insurance Contributions Act (FICA), a 1935 U.S. law that also mandates employers to make matching contributions, a payroll tax must be withheld from employees’ paychecks. The money earned is used to pay for Medicare and Social Security.
In order to be able to rely on earned financial and health benefits in their later years, the act’s original objective called for working people to contribute a certain amount of each paycheck they received during their working years to Social Security (and eventually Medicare).