FICA stands for the Federal Insurance Contributions Act. It is also referred to as the “payroll tax.” This is money that your employer is required to withhold from your pay and match with its own contribution to fund Social Security and Medicare. Social Security provides income to the elderly, the disabled and the children of deceased workers. Medicare provides payment for medical services to the elderly and disabled. Your payments through FICA and the time period you make these payments affect the benefits you receive if you are disabled or when you retire.