Supreme Court decision settles debate over medical residents
Abstract: For two decades, there’s been a contentious debate between teaching hospitals and the Social Security Administration over whether residents should be treated as employees or students. If students are considered to be employees, both they and their hospital-employers must pay FICA taxes to cover Social Security and Medicare. Hospitals have relied on a FICA exemption to define residents working more than 40 hours a week as students, but a Supreme Court decision in January upheld a Treasury regulation making such residents ineligible for the exemption. As this article explains, hospitals must immediately begin paying payroll taxes for these residents.