Take-home pay in the Washington area will drop $10 million a month starting in January when the new Medicare tax bite starts for the town's 347,000 U.S. workers.
The Medicare tax (1.3 percent of salary on amounts up to $35,100) will cost federal workers between $100 and $450 per year depending on salary.
It is part of a Social Security funding measure contained in the tax increase/reform bill cleared last week by Congress.
Congress reasoned that since about half of all federal workers become eligible for the Medicare portion of Social Security at age 65 they should pay the Medicare tax for as long as they are working, like most other Americans.
The payroll deduction for Medicare, plus the likelihood of higher health insurance premiums next year, will eat up a substantial portion of the 4 percent pay raise that federal workers are expected to get this October. That increase will not be final until authorized by the president.
Under a "grandfathering" provision of the Medicare tax, many federal workers will become eligible for full Medicare benefits even if they work only a few days in January and then retire. Because of this, many employes who had planned to retire before the end of the year now are planning to work through all or part of January 1983 to establish Medicare eligibility.
Most area members of Congress voted against the tax bill because of the Medicare tax provision. They feel it is unfair to slap a new tax on U.S. employes. More than that, they worry that this represents the first step that will lead to mandatory Social Security coverage for federal workers, and the dilution of benefits under the federal government's in-house retirement program.
A blue-ribbon task force of private citizens studying the Social Security system is due to make its report to the president -- after the November elections. It is a foregone conclusion that the group will recommend that new federal employes be brought into the Social Security system, and required to pay the full Social Security tax.
That isn't likely to be approved this year, but it could happen in 1983.