Medicare Qualified Government Employees

If you are a government employer—not a private sector employer—you may have Medicare Qualified Government Employees. Note that a Medicare Qualified Government Employee's wages and tips are subject to withholding only for Medicare, not Social Security, for part or all of the year.

Checking the Medicare Qualified Government Employee box on the Employee Information form tells the system to classify the employee as MQGE. This affects certain reports, as well as internal edits that the system makes to the employee's data.

Checking the Medicare Qualified Government Employee box does not affect tax calculations. Special Earning, Benefit, and Deduction Codes need to be set up for Medicare Qualified Government Employees. That way, employees who use a standard tax setup (FIT, FUTA, Social Security, and Medicare) will have one set of payroll codes, and employees with an MQGE tax setup (FIT, FUTA, and Medicare) will have another set of payroll codes.

If an employee is an MQGE for only part of the year, two Employee IDs must be created for the employee: one for MQGE W-2 filing, and one for standard W-2 filing. This is because, at year-end, the system creates a single W-2 form for each Employee ID, based on the employee's payroll information. The system only supports split filing for Medicare Qualified Government Employees, for which you must file two W-2 forms. Therefore, because the system cannot create multiple W-2 forms for one Employee ID, a separate Employee ID must be created for each W-2 you want to file.