Effective Dates: 01/29/2020 - Present Previous | Next

TN 8 (01-20)

SL 30001.396 Rehired Annuitant Coverage under Section 218

A. How SSA treats rehired annuitants under Section 218

Under certain circumstances, a retired State or local employee who becomes a rehired annuitant may be excepted from paying mandatory Social Security under Section 210. Notwithstanding potential exception from Section 210, if the rehired annuitant returns to work in a position covered for Social Security under the State’s Section 218 Agreement, his or her services generally will be covered for Social Security.

For a rehired annuitant, Section 218 Agreements always take precedence over the Section 210 mandatory Social Security rules; therefore, where Section 218 covers a rehired annuitant’s position, the issue of mandatory coverage under Section 210 need not be considered. Always consider Section 218 coverage first, as described in the following sections.

NOTE: 

The following sections focus on whether a rehired annuitant falls within voluntary coverage under a State’s Section 218 Agreement, and not on whether the rehired annuitant is excepted from mandatory coverage. Therefore, for purposes of the following sections, assume that the rehired annuitant is rehired into a position that is covered under a Section 218 Agreement.

B. Definition of a Rehired Annuitant

Under the Social Security Administration's (SSA) rules, a rehired annuitant is a retiree of a State, political subdivision, or instrumentality who:

  • •

    Participated in a retirement system;

  • •

    Is rehired by his or her former employer or another employer that participates in the same retirement system that the individual’s pension is coming from; and

  • •

    Either is receiving a retirement benefit from the retirement system or has reached retirement age under the retirement system.

If these criteria are not met, then the individual is not a rehired annuitant, and should be treated like any other newly hired employee for Section 218 purposes.

C. Section 218 Coverage Analysis for Rehired Annuitants

SSA performs the following analysis to determine the coverage status for rehired annuitants who are rehired into a Section 218 covered position. For additional detail on each step of the analysis, see SL 30001.396D.

IMPORTANT: 

The following analysis evaluates the Section 218 Social Security coverage-status of a rehired retiree when he or she is rehired into a Section 218 covered position. Therefore, this analysis assumes that the State’s Section 218 Agreement covers the position into which the individual is hired.

NOTE: 

Any employee hired or rehired on or after April 1, 1986, is mandatorily covered for Medicare (SL 50001.501 and SL 50001.510), unless an exclusion applies. The analysis below considers Social Security coverage status only, not Medicare.

1. Is the individual a rehired annuitant (see SL 30001.396B)?

  • •

    If YES, continue to Step 2.

  • •

    If NO, STOP. The individual is covered under the State’s Section 218 Agreement as a new hire.

2. Is the individual rehired into an absolute coverage group position?

  • •

    If YES, STOP. The individual is covered under the State’s Section 218 Agreement.

  • •

    If NO, proceed to Step 3.

3. Is the individual rehired into a Section 218 covered majority-vote or divided-vote retirement system coverage group position?

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    If rehired into a majority-vote retirement system coverage group position, continue to Step 4.

  • •

    If rehired into a divided-vote retirement system coverage group position, skip to Step 5.

4. Is the individual allowed to rejoin the Section 218 covered majority-vote retirement system?

  • •

    If YES, STOP. The individual is covered under the State’s Section 218 Agreement.

  • •

    If NO, STOP. The individual is a retirement system ineligible. Because retirement system ineligibles are always included within the majority-vote retirement system coverage group, the individual will be covered under the State’s Section 218 Agreement unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement. If the position is not excluded, then the individual will be covered under the State’s Section 218 Agreement (see SL 30001.397 and SL 30001.340D).

5. Is the individual allowed to rejoin the Section 218 covered divided-vote retirement system coverage group position?

  • •

    If YES, continue to Step 6.

  • •

    If NO, STOP. The individual is a retirement system ineligible. Because a State has the option to include ineligibles in a divided-vote retirement system coverage group, coverage will depend on whether the State included the ineligibles within the coverage group, unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement. If the position is not excluded and the State opted to include the ineligibles within the coverage group, the individual will be covered under the State’s Section 218 Agreement (see SL 30001.397, SL 30001.334A, and SL 30001.340E).

  • •

    If the State has not extended coverage to ineligibles within the divided-vote retirement system coverage group, it will be necessary to determine if mandatory coverage applies under Section 210 and IRS rules, and if the special rules for rehired annuitants exempts the individual from any applicable mandatory coverage.

6. How did the individual vote in the divided-vote referendum during prior employment?

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    If the individual voted “YES” or was hired in his or her pre-retirement employment after the divided-vote referendum occurred, STOP. The individual is covered under the State’s Section 218 Agreement.

  • •

    If the individual voted “NO” in the referendum, proceed to Step 7.

7. Determine if the individual retains his or her “NO” vote by figuring out if the individual retains membership in the retirement system from his or her pre-retirement employment. This determination involves two steps:

a. Is the individual a “new member” of the retirement system under State law and/or the retirement system’s rules (generally, the State determines the answer to this question, as discussed in SL 30001.334F.1)?

  • •

    If YES, STOP. The individual does not retain his or her “NO” vote, and is considered a “new member” of the deemed retirement system coverage group. As such, the individual is covered under the State’s Section 218 Agreement.

  • •

    If NO, continue to Step 7b.

b. Does the individual retain his or her “NO” vote (SSA determines the answer to this question)?

  • •

    If one of the following three conditions are met, then the individual retains his or her “NO” vote and is not covered under the State's Agreement:

    1. 1. 

      The individual is returning to work for the same employer; or

    2. 2. 

      The individual is rehired by a different employer in the same Section 218 deemed retirement system coverage group as the former employer (see SL 30001.324B.2 for an explanation of deemed retirement system coverage groups), or

    3. 3. 

      The individual is rehired by a different employer, but the retirement system in question obtained Social Security coverage on a system-wide single retirement system coverage group basis (see SL 30001.324B.1 for an explanation of single retirement system coverage groups). An individual who retains his or her “NO” vote is NOT covered for Social Security under the State’s Section 218 Agreement. In the absence of voluntary coverage under Section 218, it will be necessary to determine if mandatory coverage applies under Section 210 and Internal Revenue Service (IRS) rules, and if the special rules for rehired annuitants exempts the individual from any applicable mandatory coverage.

  • •

    If none of the above conditions is met, then the individual does not retain his or her “NO” vote. The individual is a “new member” of the deemed retirement system coverage group. As such, the individual is covered under the State’s Section 218 Agreement.

D. Rehired annuitants and covered positions

1. Rehired annuitants and absolute coverage positions

Where a rehired employee, regardless of whether that employee qualifies as a rehired annuitant, fills an absolute coverage position under the State’s Section 218 Agreement, the State's Agreement will cover that employee unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement.

An absolute coverage position is an employee position that was not covered by a retirement system at the time the State extended coverage to the position. If a position was covered for Social Security as an absolute coverage position under the State’s Section 218 Agreement, it will always be an absolute coverage position and maintain its Section 218 coverage, even if it is later put under a retirement system (SL 30001.380A).

NOTE: 

When determining the Social Security coverage status of a particular position, review the coverage history of that position. What currently appears to be a position under a non-Social Security covered retirement system may actually be covered for Social Security under the State’s Section 218 Agreement as an absolute coverage position.

2. Rehired annuitants and majority-vote retirement system coverage positions

Where the rehired annuitant was rehired into a majority-vote retirement system coverage position (see Section 218(d)(4) and SL 30001.324), either:

  • •

    The rehired annuitant will be allowed to join or rejoin the Section 218 covered retirement system or

  • •

    The retirement system rules will not permit the annuitant to join or rejoin the retirement system (retirement system ineligible).

If the rehired annuitant can join or rejoin a Section 218 covered retirement system, the State's Agreement will cover that rehired annuitant unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement.

If the rehired annuitant is a “retirement system ineligible” of a majority-vote retirement system coverage group, he or she will have Social Security coverage unless his or her position falls within a required or optional exclusion from the State’s Section 218 Agreement. Remember that ineligibles are always included within a majority-vote retirement system coverage group following a successful referendum (see SL 30001.340D).

NOTE: 

For rehired annuitants, a retirement system ineligible situation often happens when the retirement system does not allow the rehired annuitant to join or rejoin the retirement system in his or her current position. For a more detailed discussion of retirement system ineligibles, see SL 30001.340. Always keep in mind the retirement system ineligible possibility whenever dealing with rehired annuitant situations.

3. Rehired annuitants and divided-vote retirement system coverage groups

Where the rehired annuitant was rehired into a divided-vote retirement system coverage position (see Section 218(d)(6) and SL 30001.334), the rehired annuitant’s coverage status will depend on one of several scenarios:

  • •

    The rehired annuitant is not allowed to join the retirement system (retirement system ineligible);

  • •

    The rehired annuitant rejoins the retirement system and his or her retirement system membership continues from previous employment, or

  • •

    The rehired annuitant is treated as a new member of the retirement system.

Often a rehired annuitant may not be allowed to rejoin the retirement system in his or her current position because he or she already receives a pension from that retirement system or is entitled to such a pension. When a rehired annuitant works under a position covered by a retirement system but is prohibited from rejoining the retirement system, he or she becomes a retirement system ineligible.

For divided-vote retirement system coverage groups, the State has the option to include ineligibles in either deemed retirement system for purposes of coverage (see SL 30001.334A and SL 30001.340E). An ineligible rehired annuitant will not be covered under the State’s Section 218 Agreement if the State did not opt to include coverage for ineligibles. Where the State includes coverage for retirement system ineligibles, the rehired annuitant will have Social Security coverage unless his or her position falls within a required or optional exclusion from the State’s Section 218 Agreement.

Where the rehired annuitant is not a retirement system ineligible, Section 218 coverage status depends upon whether the rehired annuitant rejoins the retirement system or becomes a new member of the system upon being rehired (see SL 30001.334F for more information on “new members”). Where the rehired annuitant is considered a new member of the retirement system, the State's Agreement will cover him or her unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement.

NOTE: 

This issue comes into play most often when SSA is dealing with a rehired annuitant who voted “No” (against Social Security Coverage) in a divided-vote referendum during his or her pre-retirement employment in a position covered by the same retirement system that covers the current position. Where the rehired annuitant is a “new” member of the retirement system, the rehired annuitant will not retain his or her “No” vote when being rehired into the new retirement system position. He or she will be placed in the “Yes” group and will be covered for Social Security under the State’s Section 218 Agreement unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement.

As noted in SL 30001.334F.1, the State generally determines whether a retirement system member who has a break in service after Social Security coverage was extended to the retirement system coverage group is considered a new member upon return to employment covered by that same retirement system. The State’s decision depends upon the provisions of the particular retirement system involved and on State law.

If the State determines that the rehired annuitant’s retirement system membership continues—that he or she is not a new member—despite the break in service, then SSA must determine if the rehired annuitant retains his or her “No” vote. The rehired annuitant retains his or her “No” vote if one of the following conditions are present:

  • •

    The rehired annuitant returns to the same employer, or

  • •

    The rehired annuitant is working for a different employer in the same Section 218 deemed retirement system coverage group as the former employer (see SL 30001.324B.2 for deemed retirement system coverage group explanation), or

  • •

    The rehired annuitant is working for a different employer, but the retirement system in question obtained Social Security coverage on a system-wide single retirement system coverage group basis (see SL 30001.324B.1 for single retirement system coverage group explanation).

A rehired annuitant that retains his or her “No” vote is not covered for Social Security under the State’s Section 218 Agreement. In the absence of voluntary coverage under Section 218, it will be necessary to determine of mandatory coverage applies under Section 210 and IRS rules, and whether the special rules for rehired annuitants exempts the rehired annuitant from mandatory coverage.

If the current employer is in a different Section 218 deemed retirement system coverage group from the pre-retirement employer, SSA would determine the rehired annuitant for Section 218 coverage purposes to be a new member of that particular deemed retirement system coverage group. The rehired annuitant does not retain his or her “No” vote, and is covered along with all other new hires following a divided-vote referendum (SL 30001.334). The State's Agreement will cover him or her unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement. This would apply despite the fact that the rehired annuitant’s retirement system membership remained continuous from pre-retirement employment through current employment.

NOTE: 

There will be cases where the rehired annuitant was part of the “Yes” group in his or her pre-retirement employment and is rehired into a position covered under the same retirement system and under the State’s Section 218 Agreement. In those situations, the rehired annuitant will go into the “Yes” group of the current employer’s Section 218 coverage group and have Social Security coverage, whether the State determines their membership in the retirement system to be continuous or not.

There may be situations where the rehired annuitant is rehired into a position that is covered under a different retirement system than the one his or her pension is coming from, and the position is also covered for Social Security under the State’s Section 218 Agreement following a divided-vote referendum. When this occurs, the rehired annuitant is truly a new member of the retirement system and will have Social Security coverage as part of the “Yes” group unless the position falls within a required or optional exclusion from the State’s Section 218 Agreement.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1930001396
SL 30001.396 - Rehired Annuitant Coverage under Section 218 - 01/29/2020
Batch run: 09/12/2023
Rev:01/29/2020