Most State and local government employees, if covered, are covered under section 218
of the Social Security Act, i.e., their wages are subject to Federal Insurance Contribution
Act (FICA) taxes and are, therefore, considered “covered” wages (or “covered” employment, or "covered" service). Generally, SSA does not offset DIB if a PDB is
based on covered employment. Therefore, in many instances, a PDB based on State or
local employment is not offsettable.
Be alert to situations where State or local employment was not covered or where a
benefit to a State or local employee is not “based on” his or her employment. (See
DI 52125.001A.3. for the definition of "based on.")
State and local government employees hired prior to 04/01/1986 may be covered for
“Medicare only” under section 218 and may or may not have SSA covered service for
PDB purposes. PDBs paid to the number holder (NH) based on SSA covered service will
not cause offset, but PDBs based on non-covered service will cause offset.
State and local government employees hired 04/01/1986 or later who are covered for
“Medicare only” under section 210 of the Social Security Act do not have SSA covered
service for PDB purposes. PDBs paid to these disabled workers cause offset. See RS 01505.025 - Introduction to State and Local Coverage.