Social security
in the USA.

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United States

Social security in the USA – Overview

The USA has a social security system partly governed on a federal level, and partly governed on a state level. It covers healthcare, retirement benefits, disability and unemployment insurance. It is worth noting that coverage is not universal and the system is often criticised as not providing sufficient coverage.

What does the social security system in the USA cover?

The USA’s social security system, formally known as Old-Age, Survivors, and Disability Insurance or OASDI, covers issues relating to old-age (retirement), survivors (family & dependents) and disabilities (workplace injuries).

Social security is funded via payroll taxes collected under the Federal Insurance Contributions Act (FICA).

What are the mandatory contributions for employees to social security in USA?

Employees contribute to the USA’s social security system through a payroll tax under the FICA.

Mandatory employee contributions to social security total 6.20% of the first $160,200 of wages paid.

What are the mandatory contributions for employers to social security in USA?

Under the FICA, US employers make a mandatory contribution towards social security that totals 6.20% on the first $160,200 of each employee’s wages.

How do mandatory contributions compare to the surrounding countries?

The mandatory contributions of employers in the USA are, on average, lower than social security contributions for employers in Canada.

In Canada, total employer contributions total ≈10% compared to ≈8% (including Medicare & Unemployment Insurance) for employers in the USA.

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FAQs

How much do employers need to contribute to social security in the USA?

Under the Federal Insurance Contributions Act, employers contribute 6.20% on the first $160,200 of each employee’s wages to social security in the USA.

What situations does social security cover for employees in USA?

In the United States, social security is also known as the OASDI program, and covers for a range of situations including; old-age (retirement), survivors (family & dependents) and disabilities (workplace injuries).

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