What is the purpose of the Federal Insurance Contributions Act (FICA)?

The Federal Insurance Contributions Act (FICA) primarily serves to provide funding for Social Security and Medicare, which are essential social welfare programs in the United States. FICA imposes payroll taxes on both employees and employers to facilitate the financing of these programs. The Social Security tax ensures that individuals can receive benefits upon retirement or in the event of disability, while the Medicare tax funds healthcare coverage for older adults and certain younger individuals with disabilities.

FICA’s structure allows for continuous funding of these vital services, thereby supporting national welfare and aiding citizens in maintaining their financial stability in critical life stages. The focus of FICA on social insurance makes it distinct from other types of federal acts that may address unemployment, private loans, or wage regulation.