The Social Security Protection Act of 2004 (P.L. 108-203) amended the Government Pension Offset (GPO) provisions to require that State and local government employees be covered by Social Security throughout their last 60 months of employment to be exempt from GPO. Prior to this legislation, GPO did not apply if an individual’s last day of employment was in a position that was covered by both Social Security (under a section 218 agreement) and a State or local government pension system. The “last day” exemption may still apply if the last day of employment was before July 1, 2004, or if the person filed for a Social Security spouse’s benefits before April 1, 2004, and was entitled to those benefits based on that filing.

To help some teachers meet the “last day” GPO exemption, a number of school districts in Texas and perhaps other States set up programs in which they hired teachers who had worked in non-covered employment to work for as little as 1 day prior to July 1, 2004. The school districts informed the teachers that they would be covered by both the State retirement system and Social Security during this brief period of employment. Most of these programs met all of the requirements for the “last day” exemption.

For employment in these programs to qualify a worker for the “last day” exemption, the employer must be a governmental entity that is included in a section 218 agreement with SSA. SSA does not cover work under that program if the employer is not included in a section 218 agreement.

State and local government entities must be included in a section 218 agreement with SSA before we can cover their employees under Social Security.

GPO does not apply if, on an individual’s last day of State or local government service, he or she was in a position that was covered:

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  under Social Security, and

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  by the State or local government pension plan; and either

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  performed his or her last day of covered government service (whether on account of retirement, resignation, or termination) prior to July 1, 2004; or

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  filed for Social Security spouse’s benefits before April 1, 2004, and was entitled to benefits based on that filing. If an individual files for spouse’s benefits before April 1, 2004, and was entitled based on that filing; he or she may work his or her last day in Social Security covered government employment at any time. Spouse's benefits include wife's, husband's, widow(er)'s, mother's, father's, divorced spouse's, and surviving divorced spouse's benefits.

If an individual files for spouse’s benefits after March 31, 2004, and the last day of covered service is after June 30, 2004, refer to GN 02608.107.

If an individual files for a spouse’s benefit before April 1, 2004, and was entitled to benefits based on that filing, the “last day” exemption will also apply to any subsequent benefit to which the spouse’s benefit may convert, or for which the individual may file and be entitled to. For the definition of spouses see GN 02608.100B. For example:

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  A spouse’s benefit converts to a widow(er)’s benefit, or

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  An individual filed for spouse's benefits on one record before April 1, 2004, and was entitled based on that filing and later files for widow(er)’s benefits on another record.

A person, who is receiving a periodic State or local government pension based on work not covered by Social Security, returns to work in a position that is covered by Social Security but is not covered under the government pension plan. Offset will apply to the government pension unless another exception applies because the subsequent covered work was not considered in determining the pension amount.

Ms. Brooks worked as a teacher in the ABC school district. Her position was in noncovered employment. Her husband died in February 2004. She filed in February 2004 and became entitled to a widow's benefit that month. Ms. Brooks retired from teaching in 2006, and worked in a position covered by Social Security and the pension plan on her last day of employment. Ms. Brooks meets the GPO “last day” exemption because she had filed for widow's benefits before April 1, 2004.

A woman began receiving mother’s benefits in January 1989. She worked her last day of employment in a position covered by Social Security and the pension plan and retired July 2, 2004. She began receiving a government pension in August 2004. Since she filed for mother's benefits before April 1, 2004, she meets the “last day” exemption while receiving mother's benefits and will continue to meet the exemption for any subsequent spousal benefit for which she may be entitled in the future.

A woman received mother’s benefits from January 1970 to March 1980. She went to work in 1981 in noncovered government employment. She worked her last day of government employment in a position covered by Social Security and the pension plan and retired July 20, 2008. She began receiving spouse's benefits and a government pension in August 2008 at age 62. The government pension meets the “last day” exemption because she had filed for and had been entitled to a spousal (mother's) benefit before April 1, 2004.

Ms. Smith began receiving Social Security spousal benefits and a government pension in March 2004 and met the “last day” exemption. Ms. Smith returns to work for her previous government employer in a noncovered position on August 1, 2004. She does not contribute to the pension plan and the additional work will not affect her pension amount when she later stops working. Therefore, Ms. Smith will continue to meet the “last day” exemption and receive her full spousal benefit.

A wife will be eligible to file for divorced spouse's benefits on her ex-husband's record in June 2011. She worked her last day in covered employment on June 30, 2004, and began receiving a government pension in July 2004. Her spousal benefit will not be subject to GPO since she worked her last day in covered employment before July 1, 2004.

Ms. Barksdale began receiving benefits on her first husband's record before April 1, 2004. She worked her last day of employment in a Social Security covered position and began to receive a government pension in August 2004. She met the “last day” test and is exempt from GPO. In January 2005, Ms. Barksdale divorced Mr. Barksdale, married Mr. Clark, and her spouse's benefit on Mr. Barksdale's record terminated. Ms. Clark filed for a spousal benefit on Mr. Clark's record in August 2005. Since Mrs. Clark had previously met the GPO exemption, she also meets the exemption on the new spousal benefit.

Ms. Smith was employed in a non-covered position and participated in the employer’s defined benefit retirement plan. In January 2003, Ms. Smith filed for spousal benefits and elected to participate in a DROP. OGC determined that this DROP is a pension plan separate from the employer’s defined benefit retirement plan. In July 2006, Ms. Smith worked her last day of government employment in a position covered under both Social Security and the DROP. Accordingly, payments from the DROP meet the “last day” exemption requirements and GPO does not apply to these payments. Since the DROP is a pension plan separate from the defined benefit plan, payments from the defined benefit plan do not meet the “last day” exemption requirements and GPO does apply to those payments.

In February 2004, Ms. Jones filed for spousal benefits while she participated in a DROP. OGC determined that this DROP is a part of the employer’s defined benefit retirement plan. In March 2007, Ms. Jones worked her last day of employment in a position covered under Social Security and the DROP. Since the DROP is part of the defined benefit plan, payments from both plans meet the “last day” exemption.

To determine that a person was in covered employment on the last day of service:

1. a. 

   Verify that the employing entity is included in a section 218 agreement and determine whether the person’s position was covered or excluded by a section 218 Agreement Modification. If uncertain about the section 218 and position status, contact the regional program staff for the State in question see GN 02608.102D.2. (in this section). PC employees should contact their OAS staff.

2. b. 

   Also verify that Social Security taxes were withheld by reviewing a:

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     Detailed Earnings Query (DEQY); or

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     Statement from the employer; or

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     W-2 or pay stub showing Social Security covered wages were paid for the period of time in question.

Use the following phone numbers to contact regional program staffs to determine if an entity is included in and/or a position is covered by a State’s section 218 agreement:

Atlanta Regional Office

Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee

(404) 562-1324

Boston Regional Office

Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

(617) 565-2895

Chicago Regional Office

Illinois, Indiana, Michigan

(312) 575-4293

Minnesota, Ohio, Wisconsin

(312) 575-4248

Dallas Regional Office

Arkansas, Louisiana, New Mexico, Oklahoma, Texas

(214) 767-4224

Denver Regional Office

Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming

(303) 844-5473

Kansas City Regional Office

Iowa, Kansas, Missouri, Nebraska

(816) 936-5640

New York Regional Office

New Jersey, New York, Puerto Rico, Virgin Islands

(212) 264-1752

Philadelphia Regional Office

Delaware, DC, Maryland, Pennsylvania, Virginia, West Virginia

(215) 597-1759

San Francisco Regional Office

American Samoa, Arizona, California, Guam, Hawaii, Nevada, Saipan

(888) 829–0749 or

Seattle Regional Office

Alaska, Idaho, Oregon, Washington

(206) 615-2125

Verify that the last day of employment was covered by the pension plan by obtaining a statement from the pension paying agency clarifying whether the last day was included in the pension computation.

When there is a discrepancy between the allegation of the “Last Day” and the DEQY, the CR should:

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  Resolve discrepancies between the DEQY and the allegation of “coverage on the last day” before allowing an exemption.

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  Obtain a statement from the employer if Social Security coverage is questionable or from the pension-paying agency if there is a discrepancy about coverage in the retirement system and the claimant cannot explain the discrepancy satisfactorily.

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  Complete the RPOC screen in the Modernized Claims System (MCS) or prepare a report of contact (SSA-5002) to explain and resolve any discrepancies or to document the claimant's comments. Also, code this information in Shared Processes see GN 00301.286.