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Transfers between Railroad Retirement, Social Security and Medicare
(Posted June 21, 2004)
Question 469: Does the Railroad Retirement program pay into Social Security for benefits (Medicare, etc.)?
Answer: A portion of the payroll taxes that rail workers and railroads pay goes into the Social Security Trust Funds to reimburse those accounts for payroll taxes on railroad employment Social Security would have received if railroad employment were covered by the Social Security system. Rail workers and employers also pay into the Hospital Insurance Trust Fund, which finances Part A of Medicare.
There is a reverse transfer; Social Security Trust Funds reimburse the Railroad Retirement Trust Funds for benefits that Social Security would be paying if Railroad Retirement were not a separate system. The annual amount is nearly half of the income to Railroad Retirement.
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