(Dow Jones) Senate Democrats are weighing increasing Medicare payroll taxes on wealthy Americans to plug a financing gap in a health-care overhaul bill, say people familiar with discussions.

Senate Majority Leader Harry Reid (D., Nev.) is considering increasing the 1.45% employee share of the Medicare tax on wages by 0.4% to 0.5%, according to a Senate aide.

Such an increase could raise around $40 billion, the aide said, as Reid struggles to craft a health bill that will meet the demands of his 60-member Democratic caucus and not add to the deficit.

The additional tax would apply only to wage income above $200,000 for individuals, or $250,000 for married taxpayers filing jointly. That is intended to stay in line with President Barack Obama's pledge that he wouldn't increase taxes on the middle class.

The Associated Press first reported that Reid is considering a Medicare tax increase late Wednesday.

Reid spokesman Jim Manley declined to comment.

The current Medicare payroll tax rate is 2.9% of wages, with the employee paying half and the employer paying the other half.

Reid is waiting for cost estimates from the Congressional Budget Office on the health bill, before making some key final decisions about the package.

He is combining an $829 billion plan from the Senate Finance Committee and a $645 billion bill from the Senate Committee on Health, Education, Labor and Pensions.

Democratic leaders want to hold a December Senate vote on the health bill.

The final bill is expected to not add to the deficit, as new spending will be offset by a combination of cuts to existing programs and new taxes.

Some changes Reid is considering would require additional revenue. For instance, a proposal favored by Reid to scale back an excise tax on expensive health insurance plans would leave the bill as much as $30 billion short, according to one Senate aide.

In addition, Reid is expected to beef up subsidies in the bill for low-income and middle-income people to purchase health coverage.

The Medicare payroll tax increase being weighed by Reid "would be a progressive change, it would be targeting people who are most able to pay," said Steve Wamhoff, legislative director for the liberal group Citizens for Tax Justice.

The group in December proposed raising the employee share of the Medicare tax to 2.5% of wages, but also proposed applying the tax to capital gains income. The Medicare tax now only is levied on wages.

"While still an improvement, this proposal is not as advisable as the proposal we put forward on investment income," Wamhoff said. "The more you exacerbate the disparity between wage and investment income, the more you encourage people to hide their income as capital gains."

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