Social Security Disability Insurance Practice Test 2025 - Free SSDI Practice Questions and Study Guide

The correct answer is indeed that Social Security (OASDI) and Medicare benefits are primarily funded by the FICA tax. FICA, which stands for the Federal Insurance Contributions Act, imposes a payroll tax on both employees and employers. This tax is specifically designated to fund Social Security and Medicare programs, which provide benefits such as retirement income for those who are retired or disabled and healthcare for eligible individuals, respectively.

Social Security consists of Old-Age, Survivors, and Disability Insurance (OASDI), ensuring that workers have support after retirement or in the event of disability. Medicare provides essential health coverage for people aged 65 and older, as well as for some younger individuals with disabilities. Because these benefits are foundational to the safety net for many Americans, the funding derived from the FICA tax is crucial in maintaining their sustainability.

Other options mention benefits that are supported by different funding mechanisms. For example, Medicaid is funded through a combination of federal and state taxes, while Unemployment benefits are primarily financed by state-level and federal taxes unrelated to FICA. The Railroad Retirement System has its own funding structure and is not directly funded by FICA. Thus, option B accurately identifies the benefits that rely on FICA contributions for funding.