Basic (12-03)

SL 50001.570 Effect of Mandatory Coverage on Section 218 Coverage

States may continue to enter into voluntary Section 218 Agreements to extend coverage to employees who are mandatorily covered for Social Security and to employees who are members of a public retirement system.

 

If an employee is mandatorily covered for Social Security and becomes a member of a public retirement system that is covered under a Section 218 Agreement, the employee is covered for Social Security under that agreement.

A. SECTION 218 AGREEMENTS EXECUTED BEFORE JULY 2, 1991

Services covered under Section 218 Agreements executed and effective before July 2, 1991 are not affected by the mandatory coverage provisions, regardless of whether such services are performed by employees who are or are not members of their employer's retirement system. Such services continue to be covered under the State's agreement after July 1, 1991.

B. SECTION 218 AGREEMENTS EXECUTED AFTER JULY 1, 1991

States may continue to enter into Section 218 Agreements to provide Social Security coverage for services performed by employees who are and are not members of their public employer's retirement system. SSA may execute such agreements even though mandatory coverage may apply to some or all of the services involved. For example, in 1992 a State extends coverage to all positions covered by the City’s retirement system. If an employee who is mandatorily covered joins the retirement system, mandatory coverage ceases. However, the employee will be covered under the City’s Section 218 Agreement.

C. MEDICARE-ONLY AGREEMENTS IN EFFECT BEFORE JULY 2, 1991

Medicare coverage obtained under a Section 218 Agreement prior to July 2, 1991 continues after July 1, 1991.

 

EXAMPLE: In 1987, a State obtained Section 218 Medicare coverage for employees of City X. Beginning July 2, 1991, services by City X employees were subject to mandatory Social Security coverage because the City didn’t have a public retirement system. In 1995, City X established a retirement system for all City employees and mandatory Social Security coverage ceased. However, City X employees continue to be covered for Medicare under the State's Section 218 Agreement.

D. MEDICARE-ONLY AGREEMENT EXECUTED AFTER JULY 1, 1991

If a Section 218 Agreement for Medicare coverage was retroactive to periods before July 2, 1991, services performed by employees before July 2, 1991 are covered for Medicare under the Agreement. However, services performed after July 1, 1991 by employees who are not members of their employer's retirement system are mandatorily covered for Social Security.

E. ABSOLUTE COVERAGE GROUP LATER COVERED BY A RETIREMENT SYSTEM

Positions covered as an absolute coverage group under a State’s Section 218 Agreement after July 1, 1991, continue to be covered under the Section 218 Agreement if the positions are later covered by a public retirement system.

 

EXAMPLE: A State's Section 218 Agreement for a City covered services performed in positions not covered by a retirement system, effective January 1, 1959. On July 1, 1994, the City established a public retirement system. Coverage under the Section 218 Agreement continues. The addition of a retirement system to such positions does not negate the coverage under the Section 218 Agreement.

F. ERROR MODIFICATIONS

An error modification should list the date the coverage error began as the effective date regardless of whether the coverage error began prior to, on, or after July 1, 1991 (see SL 40001.465B). Coverage will continue from the effective date forward.

G. SERVICES OPTIONALLY EXCLUDED FROM SECTION 218 AGREEMENT

Under a Section 218 Agreement, a State can exclude from coverage certain services performed by members of any coverage group including retirement system coverage groups. If the Agreement does not specifically exclude these services, they are covered. Beginning July 2, 1991, most services that were optionally excluded under a Section 218 Agreement are covered by the mandatory coverage provisions unless the employee is covered by a public retirement system or the services are excluded from mandatory coverage.

 

EXAMPLE: A City’s Section 218 Agreement excludes part-time positions that require less than 20 hours of work per week. The City’s cafeteria has part-time employees who work part-time 15 ours per week. The City’s retirement system membership is only for employees who work in full-time positions. Therefore, part-time employees of the cafeteria are subject to mandatory Social Security and Medicare.


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http://policy.ssa.gov/poms.nsf/lnx/1950001570
SL 50001.570 - Effect of Mandatory Coverage on Section 218 Coverage - 12/17/2015
Batch run: 12/17/2015
Rev:12/17/2015