This earnings limit is used in computing the employee's Social Security tax and therefore the employer's Social Security tax. (In effect, the employer must match each employee's Social Security tax.)
The combination of the Social Security tax and the Medicare tax is often referred to as the FICA tax. However, there is no annual limit or cap on the earnings when computing the employee's, the self-employed's, or the employer's Medicare tax.
Learn Bookkeeping: Gain unlimited access to our bookkeeping seminar videos, bookkeeping proficiency exams, bookkeeping cheat sheet, visual tutorials, and more when you upgrade to PRO.