TN 8 (01-20)

SL 30001.385 Termination of Coverage

A. Prohibition on voluntary termination of coverage

Current law prohibits a State, an interstate instrumentality, or the Social Security Administration (SSA) from terminating existing coverage, in whole or in part, under a Section 218 Agreement.

B. Effective termination of coverage caused by a dissolution of a covered entity

If a political subdivision legally dissolves, positions under that entity cease to exist (see 20 C.F.R. § 404.1219). If the State covered the political subdivision individually (as opposed to covering it through a system-wide referendum), the dissolution of the political subdivision will result in effective termination of coverage, notwithstanding the statutory prohibition on termination of coverage (see SL 30001.385A). In the absence of positions, there are no employees to comprise a coverage group and the political subdivision’s legal dissolution precludes the possibility of future employees. Accordingly, the political subdivision’s legal dissolution effectively terminates coverage where it causes the coverage group to be permanently empty.


For more information on the State Administrator’s obligation to report a dissolution and corresponding evidentiary standards, see SL 40001.485.

C. Historical voluntary termination of coverage (before April 20, 1983)

 Before the April 20, 1983 enactment of the Social Security Amendments of 1983 (Public Law 98-21), a State could have terminated its Agreement either in whole or for one or more absolute coverage groups. Either the State or the Secretary of Health and Human Services could have initiated the termination. Once an Agreement was terminated for a coverage group, coverage could not be provided again for that group.

1. Termination by the State

The State could terminate the Agreement in whole or in part by giving at least two years advance notice in writing to SSA. The coverage must have been in effect at least five years before SSA receipt of the notice. This meant five years actual coverage from the effective date of the first coverage and not five years from the date of execution of the Modification that provided the coverage. The two-year period ran from the date the notice was mailed or delivered to SSA and not the date of receipt.

The termination could have applied to any absolute coverage group. For example, coverage for a proprietary function coverage group could have been terminated without terminating coverage for the governmental function coverage group. This could have been done even though the coverage groups were not separately identified when the coverage was provided. A retirement system coverage group was not a coverage group for termination purposes.

2. Termination by the Secretary

The Secretary could have terminated an Agreement, in whole or in part, if the State failed to comply or was no longer legally able to comply with the Agreement. The State must have been given reasonable notice and opportunity for a hearing. The termination action must have been taken within two years of the notice of the intent to terminate unless the State was again in compliance with the terms of the Agreement. Termination by the Secretary was generally limited to cases in which an entity had ceased to exist.

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SL 30001.385 - Termination of Coverage - 01/29/2020
Batch run: 01/29/2020