While understanding all possible codes is something you have no responsibility for as an employee, recognizing the most common ones will make the document clearer. Some knowledge of these codes will also allow you to zoom in on errors and ask for corrections.
ER health stands for employer responsible health contributions. It refers to the amount that your employer has to pay in the form of healthcare coverage.
In some paystubs, employer contributions to health may come under an alternative abbreviation. Two of the common possibilities include ER HCV and ER Health Cov.
What Does ER Med on Paycheck Information Actually Mean for You?
Now that we have the formal definition out of the way, let’s talk about what ER medical on a pay stub actually means to you.
The employer responsible coverage for healthcare isn’t a deduction. This means the sum is not going to be taken out of the money you’ll be paid for the respective period. The abbreviation refers to the amount that the company you work for invests in your health insurance.
ER Cost of on Pay Stub: A Simple Example
Here’s a simple example of how to read this information on your paystub.
Let’s imagine the following scenario – your healthcare coverage for a certain period of time is 400 dollars. You pay 150 dollars. This means that 350 dollars will be provided by the employer and on a pay stub, the amount is going to show up under ER health.
Why Does ER Med Show Up on a Pay Stub?
So, why exactly does the information about the employer’s contribution to your health coverage have to appear separately on your paycheck, given the fact it’s not a deduction?
This information has to be made available – that’s a requirement under The Patient Protection and Affordable Care Act. More information on employer responsibilities and the eventual penalties that can be experienced in the event of a compliance failure is available here.
How to Read a Paystub: What Other Health Information Can You Find?
Making sense of your paystub depends on several things. For a start, a document created via a professional paystub generator is going to be properly organized and easy to scan. It’s very important for an employer to use the right tool, giving employees access to well-organized, easy to scan through paystubs.
Every single paycheck stub is going to feature various basic kinds of information. Some of the data that will always be listed includes:
- Your name and personal details
- The employer’s details (company name, address, contact information, etc.)
- Pay date and pay period
- Gross wages
- Hours worked (if applicable and payment is being made on an hourly basis)
- Other deductions
- Additional information like sick leave, vacation days, etc.
Medical Contributions Information on a Paystub
Apart from the general kinds of information, a paystub is also going to contain a couple of more specialized entries. Some of those pertain to your health coverage and the contributions that both you and your employer have to make.
The ER Health contributions fall under this section.
Here’s how to make sense of the medical contribution information that your paystub contains.
For a start, a paystub needs to have Medicare information included. As per federal government requirements, each employed US citizen has to make Medicare contributions. Current regulations state that every worker has to contribute 1.45 percent of their gross income to Medicare.
An employer has to match that contribution by also contributing 1.45 percent on behalf of the employee.
In the event of wages exceeding 200,000 dollars in a calendar year, an employer will have to deduct an additional 0.9 percent that will be dedicated to Medicare contributions.
Medical Insurance Coverage
People who have additional medical or dental insurance through their place of employment will see an additional section in their paycheck stub.
The contributions to this plan are deducted from the employee’s pay, as well. This is why the information about health insurance coverage is also going to show up under deductions.
Health Savings Accounts
This is a paystub section that’s not going to show up for all employees.
A health savings account is an opportunity that workers have to set aside pre-tax money in a specialized account that can be used to cover medical expenses. If you decide to employ this option, it is going to be featured on your paystub.
Only people who have a high-deductible health insurance plan are eligible for the opening of a health savings account. The contributions to this account are deducted from wages before taxes are applied.
Understanding Medicare and Social Security Deductions
Because Medicare and social security deductions are such a prominent part of paystub information, let’s dive a little bit deeper into those.
Medicare Tax Essentials
On your paystub, Medicare tax deductions may show up under one of the following abbreviations:
All covered income is taxable under Medicare (as already mentioned – 1.45 percent for employees and 1.45 percent for employers). There’s no income limits when it comes to Medicare taxation being applied.
Keep in mind there’s no legal requirement for the employer match to appear on the paystub. You may only see the 1.45 percent deduction from your wage. The fact that you’re not getting details on the employer contribution, however, doesn’t mean they’re not matching your deduction.
Social Security Tax Essentials
Social security tax is the amount deducted from your income to subsidize the US Social Security Program. This program provides payments for retirement, disabilities and survivorship.
On your paycheck, the social security tax may appear under one of the following abbreviations:
In 2023, the social security contribution an employee has to make is 6.2 percent of their income. The amount is matched by an employer, adding up to a total percentage of 12.4.
The maximum wage on which the social security tax deduction can be based is 160,200 dollars. In 2023, this threshold is expected to go up to 160,200 dollars. Here’s some more information on social security tax limit changes that will occur in 2023.
Other Common Types of Payroll Deductions
Health and social security deductions aren’t the only ones that will show up on a paystub. Various other common types of deductions apply to millions of employees across the US.
As the name suggests, these ones are non-negotiable. The sums will be taken out of your income, no matter how much you earn or who is your employer.
Generally speaking, there are two kinds of mandatory deductions that all US income earners have to deal with – federal and state income taxes.
Wage garnishments also fall under the mandatory deductions.
Social security and Medicare payments are also going to appear under this section of the paycheck stub.
Deductions aren’t just being made for healthcare provision. There will also be sums used to finance your retirement later on.
Retirement deductions usually come in the form of employer-sponsored 401(k) or 403(b) plans.
Contributions to retirement plans occur from pre-tax income. They are made for every single pay period.
A few fall under the category:
- Charitable contributions: employees can decide to make contributions to charities and causes. These are taken out of their income for a certain period (or they can be deducted on an ongoing basis).
- Union dues: some types of union dues can be deducted automatically from employee income.
- Company contributions: sometimes, employees owe money to the company that they work for. Such deductions can be made to provide coverage for tools, trainings, loans, etc. Sometimes, this deduction may show up on a paystub as a job-related expense.
- US Savings Bonds purchases
Does Your Location Affect Paystub Information?
One final thing to keep in mind is that your location matters.
While paycheck deductions are more or less the same across the US, the amounts being withheld do depend on location.
State taxes vary from one part of the US to another. This is why you have to be familiar with state income tax requirements in the place where you live.
As of 2023, nine states have no income tax. Other places like Hawaii, for example, have 12 income tax brackets that apply to different amounts.
Thus, both your location and your income will affect deductions appearing on your paystub. It’s a good idea to inform yourself about your tax obligations so that you’ll find it easier to spot potential mistakes on your paystub.
A well-made, comprehensive paystub is going to feature lots of information and details about your income and taxes. You’ll also see some numbers pertaining to healthcare and insurance contributions. While these numbers aren’t necessarily essential, they can paint a clearer picture about your financial status and the eventual emergencies that you wouldn’t have to worry about in the future.
Having at least some understanding of federal, state taxes and other deductions is a part of your financial literacy. If you don’t know how to read such data or what applies to you, have a conversation with the company’s accountant or payroll specialist. This professional can help you understand the niche paycheck stub numbers and the way these impact your income (or your future retirement).