SL 20001.201 Program Overview
State and local government employees are covered for Social Security and Medicare through a Section 218 Agreement between the State and the Social Security Administration or mandatorily under Federal law.
A. SECTION 218 HISTORY
When the Social Security Act (Act) was enacted in 1935, State and local government employees were excluded from Social Security coverage because there was a legal question regarding the Federal government’s authority to tax State and local governments.
Because many governmental employees did not have their own retirement system, the 1950 Social Security Amendments added Section 218 to the Act to make Social Security coverage for State and local government employees possible.
Beginning in 1951, States were allowed to enter into voluntary agreements with the Federal government to provide Social Security coverage to State and local government employees who were not covered by a retirement system. These voluntary agreements are called Section 218 Agreements because they are authorized by Section 218 of the Act.
The Social Security Amendments of 1954 expanded the Act to allow States to extend Social Security coverage to State and local government employees who were members of public retirement system (except police officers and firefighters) provided coverage was authorized by the State and approved through a voluntary referendum of all retirement system members.
In 1956, the Act was amended to authorize certain States to divide retirement systems into two separate groups: those who desired coverage and those who did not. The 1956 Act also authorized certain States to extend Social Security coverage to police officers and firefighters covered by a retirement system.
Before 1983, States could terminate Social Security coverage for employees covered under the State’s Section 218 Agreement. The 1983 Social Security Amendments rescinded this provision of the Act and prohibited States from terminating coverage beginning April 20, 1983.
All 50 States, Puerto Rico, the Virgin Islands, and approximately 60 interstate instrumentalities have a Section 218 Agreement with SSA. Because of the voluntary nature of Section 218 Agreements, the extent of Social Security coverage varies from State to State.
B. MANDATORY SOCIAL SECURITY AND MEDICARE COVERAGE
Medicare coverage became mandatory for State and local government employees hired or rehired after March 31, 1986. Beginning July 2, 1991, Social Security and Medicare coverage is mandatory for State and local governments employees who are not members of a public retirement system and who are not covered under a Section 218 Agreement.