SL 50001.580 Rehired Annuitants
Under the IRS regulations, rehired annuitants are exempt from Social Security coverage (but not Medicare withholding) if the annuitant is employed by the same employer OR the annuitant is employed by a different employer who maintains the same retirement system. For example, if a teacher who retires from service with a school district that participated in a statewide teachers’ retirement system begins to receive benefits from the system, and later becomes a substitute teacher in another school district that participates in the same statewide system, the employee is treated as a rehired annuitant.
If the annuitant is rehired in a position that is covered under a Section 218 Agreement, the rehired annuitant is covered for Social Security and Medicare under the Agreement. Section 218 Agreements take precedence over the mandatory coverage rules.
A. MEDICARE COVERAGE
Beginning April 1, 1986, rehired annuitants are mandatorily covered for Medicare. The continuing employment exception to Medicare does not apply because the original employment relationship terminated at retirement.
B. SECTION 218 COVERAGE
If an annuitant is rehired into a position which is covered under a Section 218 Agreement, the rehired annuitant’s services are covered under the agreement.
EXAMPLE 1: A teacher who was covered under a State Retirement System retired and was hired as a bus driver. The bus driver position is covered under a Section 218 Agreement. The teacher is covered for Social Security and Medicare.
EXAMPLE 2: A teacher retires from a school district, starts collecting a pension under the State Retirement System, and returns to work for the same school district as a bus driver. The bus driving position is not covered by a Section 218 agreement and is not covered by the State Retirement System. The teacher is a rehired annuitant and is not covered for Social Security but is covered for Medicare only.
C. SECTION 218 COVERAGE—DIVIDED RETIREMENT SYSTEM
If a rehired annuitant performs services in a position under the same covered divided retirement system from which the annuitant retired and the annuitant was part of the system that did not vote for coverage, the Social Security coverage status of the rehired annuitant’s services depends on whether the annuitant is considered a new member of the retirement system upon reemployment.
If the rehired annuitant is considered a new member of the divided retirement system, services performed by the rehired annuitant are covered under the State's Agreement with that division of the retirement system that voted for Social Security coverage, in accordance with Section 218(d)(6)(C) of the Act.
If the rehired annuitant is not considered to be a new member of the divided retirement system upon reemployment, the rehired annuitant retains their vote (Social Security coverage status) under this same divided retirement system before retirement. If the rehired annuitant was part of the retirement system that did not vote for Social Security coverage, the IRS rules for mandatory coverage determine the Social Security coverage status of the rehired annuitant.