The proper application of the continuing employment exception (SL 50001.510A) and the continuation of coverage rules can cause some confusion when dealing with
the Medicare HI-only divided-vote referendum of a State employee who transfers between
agencies and entities within the State government system. The same holds true for
the Medicare HI-only divided-vote referendum of a political subdivision employee who
transfers between agencies and entities of the same political subdivision.
In order to determine correctly whether a State or local government employee carries
his or her vote when transferring between jobs, it is important to delineate a few
factors and determine what role they play. The principal factors to consider are:
-
1.
Was the individual a bona fide employee and performing regular and substantial services
for the State or political subdivision employer before April 1, 1986?
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2.
Was the transfer from one State employer to another State employer of the same State
made without termination of the overall employment relationship with the State?
-
a.
For an individual who transferred from a political subdivision employer to another
employer of the same political subdivision, was the transfer made without termination
of the overall employment relationship with the political subdivision?
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3.
Is the continuing employment exception applicable, which exempts the individual from
the mandatory Medicare provisions (SL 50001.510)? This requires the State to determine whether the following two conditions are met:
-
a.
Was the employee transferring from one State employer to another employer of the same
State and
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b.
Did the transfer not result in terminating the overall employment relationship with
the State (it could not be terminated after March 31, 1986 (P.L. 99-272, Section 13205;
SL 50001.510))?
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The scenarios below deal with employees who voted in Medicare HI-only referendums.
As far as employment for the original government employer is concerned, the individuals
discussed in the scenarios will be considered employees who were hired and performing
substantial services for the employer before April 1, 1986. It will be presumed that
in each of the scenarios below the answer to Factor 1 is “Yes.”
Scenario 1: Dawn Smith was an employee of a State agency (not an institution of higher learning)
who voted for Medicare coverage in the referendum. She later transferred to a job
in another State agency (not an institution of higher learning) but under the same
retirement system as her former position. Does Ms. Smith carry her Medicare referendum
vote?
In this case, since Factor 1 is fulfilled, one should then determine if the continuing
employment exception (Factor 3) applies based upon the conditions noted above. Scenario
1, as presented, does fulfill Part a; but it is unclear whether it would fulfill Part
b.
If the transfer did terminate the overall employment relationship
with the State, then the continuing employment relationship exemption would not apply, and Ms. Smith
would be considered a “new hire” as far as the current State employer is concerned
and would fall under the mandatory Medicare provisions.
If the transfer did not terminate the overall employment
relationship with the State, then Part b would be fulfilled and the continuation of employment exception to mandatory
Medicare would apply. In other words, Ms. Smith would not fall under the mandatory
Medicare provisions.
If the employee has fulfilled the requirements for the continuing employment
exception, then
SSA
looks
at the continuation of coverage
aspects.
In Scenario 1, both former and current State agency employers are under the same retirement
system, and since neither is an institution of higher learning, the retirement system
employees of both agencies would also have received Medicare coverage via the same
referendum (or same deemed retirement system) (see SL 30001.321). Thus, Ms. Smith would then carry her vote into the new position.
Scenario 2: Peter Bennett was an employee of a State agency who voted for Medicare coverage in
the referendum. He later transferred to a job in another State agency but under a
different retirement system from that of his former position. Does Mr. Bennett carry
his Medicare referendum vote?
Since Factor 1 is fulfilled, one should then determine if the continuing employment
exception (Factor 3) applies based upon the conditions noted above. Scenario 2, as
presented, does fulfill Part a; but it is unclear whether it would fulfill Part b.
If the transfer did terminate the overall employment relationship
with the State, then the continuing employment relationship exemption would not apply, and Mr. Bennett
would be considered a “new hire” as far as the current State employer is concerned
and would fall under the mandatory Medicare provisions.
If the transfer did not terminate the overall employment relationship with the
State, then Part b would be fulfilled and the continuation of employment exception to mandatory
Medicare would apply. In other words, Mr. Bennett would not fall under the mandatory
Medicare provisions.
If the employee has fulfilled the requirements for the continuing employment
exception, then
SSA
looks
at the continuation of coverage aspects.
Although both former and current employers are government agencies of the same State,
each agency has a different retirement system providing coverage for their respective
employees. With his transfer to the current employer, Mr. Bennett is now under the
jurisdiction and rules of the retirement system of the current employer; thus, his
Medicare referendum vote in the retirement system of the former employer would not
carry over to the new position. If Mr. Bennett meets the continuing employment exception,
he would not have Medicare coverage unless the current employer’s retirement system
is covered for Social Security by a Section 218 Agreement or has provided Medicare-only
coverage for pre-April 1, 1986 hires through a Medicare-only referendum.
Scenario 3: Linda Taylor was a retirement system covered employee of a State Institution of Higher
Learning (State University) who voted for Medicare coverage in the referendum. The
State University was covered for Medicare as a “deemed retirement system group” separate
from the rest of the State government positions. Subsequently, Ms. Taylor moved to
a non-State University position with a State Agency that was covered by the same retirement
system. Employees in both positions are State employees. Because the State University
was originally covered as a “deemed retirement system group” separate from the rest
of the positions of the same retirement system, does Ms. Taylor carry her vote?
Since Factor 1 is fulfilled, one needs to determine whether the continuing employment
exception (Factor 3) applies based upon the conditions noted above. Scenario 3, as
presented, does fulfill Part a; but it is unclear whether it would fulfill Part b.
If the transfer did terminate the overall employment relationship, then the continuing employment relationship exemption would not apply, and Ms. Taylor
would be considered a “new hire” as far as the current State employer is concerned
and would fall under the mandatory Medicare provisions.
If the transfer did not terminate the overall employment relationship with the
State, then Part b would be fulfilled and the continuation of employment exception to mandatory
Medicare would apply. In other words, Ms. Taylor would not fall under the mandatory
Medicare provisions.
If the employee has fulfilled the requirements for the continuing employment
exception, then
SSA
looks
at the continuation of coverage aspects.
In Scenario 3, both former State University and current State Agency employers are
under the same retirement system, but in this situation the State Institution of Higher
Learning (State University) obtained Medicare coverage as a “deemed retirement system
group” separate from the rest of the State government agencies covered by the same
retirement system—Medicare coverage was obtained for the State University via a separate
Medicare referendum from the rest of the State government—as permitted in SL 30001.321 and SL 30001.331
At this point, one would need to refer to SL 30001.334F.2 (Change in Employment), which states:
If the retirement system which was divided was not the entire system, a member of
a deemed retirement system who transfers to another deemed system is a “new” member
and is compulsorily covered…If a member of a deemed retirement system transfers to
a position under a retirement system which has not been covered, a referendum must
be held before he or she can be covered.
As the result of a coverage referendum (either divided or favorable majority), “new”
members of the retirement system are compulsorily covered. In a divided referendum
situation, a transferee whose former position was in another deemed retirement system
would be treated as a “new” member of the retirement system in their current position
with the State. The transferee would be placed in the “yes” group (provided a coverage
referendum has been held) regardless of how he or she had voted in their previous
position with the State. If the retirement system of the current employer has not
yet obtained Medicare coverage for pre-April 1, 1986 hires, then the transferee would
no longer have Medicare coverage.
It had been established that the retirement system positions at the State University
were covered for Medicare as a “deemed retirement system” separate from the retirement
system positions in the rest of the State government. Thus, Ms. Taylor would not carry
her vote when transferring from a retirement system position at the State University
to a retirement system position at another State government agency. In her current
position with the State Agency, Ms. Taylor would either be given Medicare coverage
if there was a favorable majority or divided vote Medicare referendum for pre-April
1, 1986 hires of the State Agency retirement system, or she would lose Medicare coverage
if the State Agency retirement system does not have Medicare coverage for pre-April
1, 1986 hires.
Scenario 4: Same as Scenario 3, both current and former employers are entities within the same
State government, except each entity is covered by a different retirement system.
Jeffrey Merrill was a retirement system covered employee of a State Institution of
Higher Learning (State University) who voted for Medicare coverage in the referendum.
The State University was covered for Medicare as a “deemed retirement system group”
separate from the rest of the State government positions. Subsequently, Mr. Merrill
moved to a non-State University position with a State Agency that was covered by a
different retirement system. Employees in both positions are State employees. Does
Mr. Merrill carry his vote?
Scenario 4 actually resembles Scenario 2. As in Scenario 2, SSA first must consider
whether the continuing employment exception (Factor 3) applies based upon the conditions
noted above. Scenario 4, as presented, does fulfill Part a; but it is unclear whether
it would fulfill Part b.
If the transfer did terminate the overall employment relationship, then the continuing employment relationship exemption would not apply, and Mr. Merrill
would be considered a “new hire” as far as the current State employer is concerned
and would fall under the mandatory Medicare provisions.
If the transfer did not terminate the overall employment relationship with the
State, then Part b would be fulfilled and the continuation of employment exception to mandatory
Medicare would apply. In other words, Mr. Merrill would not fall under the mandatory
Medicare provisions.
If the employee has fulfilled the requirements for the continuing employment
exception, then
SSA
looks
at the continuation of coverage aspects.
Although both the former employer (the State University) and the current employer
(State Agency) are government agencies of the same State, each agency has a different
retirement system providing coverage for their respective employees. With his transfer
to the current employer, Mr. Merrill is now under the jurisdiction and rules of the
retirement system of the current employer; thus, his Medicare referendum vote in the
retirement system of the former employer would not carry over to the new position.
If Mr. Merrill meets the continuing employment exception, he would not have Medicare
coverage unless the current employer’s retirement system is covered for Social Security
by a Section 218 Agreement or has provided Medicare-only coverage for pre-April 1,
1986 hires through a Medicare-only referendum.
Scenario 5: An employee of the State moves to a political subdivision or vice versa; both former
and current positions are covered by the same retirement system. Does the employee
carry his or her vote?
In Scenario 5, one must first consider whether the continuing employment exception
(Factor 3) applies based upon the conditions noted above. Scenario 5 presents the
employee moving from State government employment to a political subdivision government
position or vice versa. To move from State government employment to political subdivision
employment (or vice versa) requires the termination of the employment relationship
with the former employer, despite the fact that both the former and current job positions
are covered by the same retirement system. Because the continuing employment exception
would not be met, the employee would be considered a “new hire” and mandatory Medicare
would apply in the new position (SL 50001.510).
Scenario 6: An employee of the State moves to a political subdivision or vice versa; the former
and current positions are covered by different retirement systems. Does the employee
carry his or her vote?
No, the employee would not carry his or her vote. As in Scenario 5, the employment
relationship with the government employer terminated after March 31, 1986. SL 50001.510 expressly states that an employee who transfers from a State employer to a political
subdivision employer (or vice versa) becomes a “new hire” of the governmental entity
for whom he or she is now working. The continuing employment exception would not be
met, and the employee would either be mandatorily covered for Medicare or compulsorily
covered if the retirement system under which he or she now works has Social Security
coverage based on a Section 218 Agreement.