Identification Number:
SL 10001 TN 4
Intended Audience:See Transmittal Sheet
Originating Office:ORDP OISP
Title:Introduction
Type:POMS Transmittals
Program:All Programs
Link To Reference:
 

PROGRAM OPERATIONS MANUAL SYSTEM
Part SL – State and Local Coverage Handbook
Chapter 100 – Introduction to State and Local Coverage Handbook
Subchapter 01 – Introduction
Transmittal No. 4, 01/29/2020

Audience

Originating Component

OISP

Effective Date

Upon Receipt

Background

We are streamlining policy for clarity, merging sections, and archiving duplicate information. We are also amending the format in several of the sections, standardizing citations and abbreviations, and creating new policy to expand on existing sections for better understanding of content.

Summary of Changes

SL 10001.110 Maintaining the SLCH

We archived this section. It is no longer applicable. SLHC stood for the “State and Local Coverage Handbook.” We do not maintain and update the actual handbook, as it is now the SL POMS.

SL 10001.120 SSA-IRS Federal Responsibilities

In section A, we revised the third and fourth bullets for clarity and readability. We expanded subsection B by folding in content previously found in RS 01505.014. RS 01505.014 is being archived. We also clarified some of the content in subsection B as it relates to the Omnibus Budget Reconciliation Act by specifying the year we are discussing, and created a “NOTE” section by moving the last paragraph. We removed the word “physical” as it related to maintaining custody of Agreements, modifications, dissolutions, and relevant correspondence, as these records may be maintained in physical and electronic form, depending on how each region maintains copies and backup copies.

 

SL 10001.130 State Social Security Administrator Responsibilities

  • We removed editorial comments from the introductory paragraph regarding the responsibilities of state administrators.

  • We revised subsection A to remove the first paragraph, since it was largely duplicative of SL 20001.201. Any additional information from this paragraph was incorporated into SL 20001.201.

  • We revised language in the last paragraph of subsection A for clarity and readability.

  • We retitled subsection B.1 to “Maintain Section 218 coverage.”

  • We deleted repetitive information from the introduction to subsection B.

  • As information the subsection B.1 was duplicative of some of the subsequent sections, we reorganized the subsections to each cover specific responsibilities of the state administrators so there was not repetition among subsection B.1 and the remaining subsections, as further discussed below.

  • We combined subsection B.1’s introductory paragraph with the information from the introductory paragraph from Subsection B.4, except that maintenance of ballots was moved into its own bullet at subsection B.1 bullet 3.

  • Subsection B.1.a became the first bullet in Subsection B.1 and was combined with Subsection B.4 to reflect the requirements for maintaining documents except that maintenance of correspondence was moved to its own bullet at subsection B.1 bullet 4.

  • We added a second bullet in Subsection B.1 to allow for maintenance of electronic or physical copies of notices of legal name change.

  • We moved and updated the information in subsection B.1.a bullet 5 to subsection B.1, third bullet, to clarify and state that the State Administrator can retain the ballots either in its original form, copies, or electronically.

  • We moved and updated the information in subsection B.1.a bullet 6 to subsection B.1 bullet 4 and clarified that letters and other forms of correspondence could be maintained in either electronic and/or physical form.

  • We moved subsection B.4 bullet 2 to subsection B.1 bullet 5. We also added a note under subsection B.1 bullet 5 per HQ OGC’s suggestion that if the state administrator chooses to not retain physical copies, they must implement a separate redundant secure backups and that SSA does not store ballot information and cannot assist with recovery if necessary documents are lost or destroyed.

  • We moved subsection B.4 bullet 3 to subsection B.1 bullet 6.

  • We moved subsection B.4 bullet 4 to subsection B.1 bullet 7.

  • We moved subsection B.1.d to create a new subsection B.2 “Execute modifications.” We rephrased the underlying information in sentence form.

  • We moved subsection B1.e to create a new subsection B.3 “Conduct referendums.” We rephrased the underlying information in sentence form.

  • We moved subsection B.1.b and subsection B.1.f and combined them to create a new subsection B.4 “Assist with coverage determinations and take coverage related actions.” We rephrased the underlying information in sentence form. We updated the language from subsection B.1.f by removing the word “inactive” as we are clarifying several sections related to “inactive entities” by removing instructions to reflect the current up to date process regarding notification of “inactive” entities, which was brought to our attention by the State Administrators, ROs, and RCCs . This process is no longer necessary and serves no use, as SSA no longer collects FICA contributions. The original purpose for the inactive notification process was to advise SSA not to send pre-addressed reporting forms for entities with no employees. HQ OGC as well as IRS concurred on the staff level with these changes and have no issues.

  • We moved subsection B.1.c to create a new subsection B.5 “Guarantee appropriate withholding and reporting.” We rephrased the underlying information in sentence form.

  • We moved subsection B.2 to create a new subsection B.6. We renamed the section “Provide notice to SSA” and indicated that the state administrator is to provide notice to SSA of state administrator changes with the information from subsection B.2. We clarified that if a change includes a change in a state administrator, the outgoing state administrator should send notice to the regional office before leaving office. We removed instructions in subsection B.2 where the State Administrator needs to send a written notice of any state administrator changes to OISP in line with the paper reduction program. Also, the RO is already being notified of the change and the RO deals directly with the State Administrator. Therefore, if OISP needs to be aware of any changes, they will contact the RO. We moved the information from subsection B.1.g and included it under a separate bullet in this section.

  • We moved subsection B.3 to subsection B.7, and added “and collaborate” to the title to rename it “Communicate and collaborate with SSA, IRS, employers, and stakeholders.” We separated communicating with the IRS to its own separate bullet under Subsection B.7 bullet three. We rephrased bullet four to be “State and local governments” instead of “IRS Federal, State and Local Governments.” We wrote out terms used for the first time and defined abbreviations to be used later in the SL POMS. We added a second paragraph emphasizing collaboration with the parties to resolve issues.

  • We moved subsection B.1.h to create a new subsection B.8 “Provide guidance to employers.” We rephrased the underlying information in sentence form.

  • We moved subsection B.5 to subsection B.9. At the end of the first sentence, we clarified that the education and outreach was “on coverage and benefits issues.”

  • We added subsection B.10 “Assist with closing agreements” to indicate that the State Administrator should assist entities in completing their closing agreements with IRS and provide SSA with the copy of the approved closing agreement. We also added relevant cross references to this subsection.

  • We moved subsection B.6 to create new subsection B.11. We rephrased the last sentence to clarify the meaning and remove repetition of similar words for ease of reading.

  • We moved subsection B.7 to create new subsection B.12. In bullet 6, we removed “or mechanism,” because the word “method” accurately conveyed the meaning of the sentence. In the last paragraph of the subsection, we removed the clause “to maintaining effective staffing levels,” as it is clear that the first paragraph and bullets dealt with that subject-matter and the last paragraph was expanding beyond that general topic.

  • We moved subsection B.8 to create new subsection B.13. We rephrased the first paragraph for clarity and cross-referenced the information to SL 20001.220. We removed the chart outlining issues that require determinations of federal and state law, since that information is repeated in SL 20001.220.

  • We moved subsection B.9 to create new subsection B.14, which we renamed “Develop program strategies.” In the fifth bullet, we said “disseminate” instead of “dissemination of.” In the sixth bullet, we changed “your Section 218 program” to “the State’s Section 218 program.”

  • We moved subsection B.1.k to create new subsection B.15 “Advocate on behalf of the State Social Security Administrator position.” We rephrased the underlying information in sentence form.

  • We revised subsection C to removed reference of the State and Local Coverage Handbook as the primary resource for administering Section 218 policies and indicated that it is instead the State and Local Coverage Handbook POMS (SL POMS).

  • We revised the table in subsection C.1 to indicate that the SLGE SSA website noted who to contact generally instead of who to contact in the State regarding questions, laws, and regulations, as it provides a broader set of contacts. We also revised the table to include an updated link to the IRS page regarding tax information for federal, state, and local governments.

  • We revised the table in subsection C.2 to mirror the sentence structure of the table in subsection C.1 for parallel form except added "such State" at the end of the last sentence.

  • We revised the table in subsection C.2 to include citations to the applicable portions of the Code of Federal Regulations to State and local coverage.

  • We revised the table in subsection C.3 to remove the first row discussing the state and local coverage handbook. We rephrased the information in sentence form to mirror the structure of the table in subsection C.1 for parallel form.

  • We rephrased the information in the tables in subsection C.4 and C.5 to mirror the structure of the table in subsection C.1 for parallel form.

  • We updated the information contained in C.5 to reflect the updated news links for Social Security and the new link for the IRS newsletter and updated the corresponding description to be accurate with the new IRS page.

SL 10001.120 SSA-IRS Federal Responsibilities

A. Social Security Administration (SSA)

SSA is responsible for the Social Security and Medicare coverage provisions under the Act. Under the authority of the Act, SSA:

  • Administers the Social Security and Medicare coverage provisions for State and local government employees under Sections 210 and 218;

  • Makes rules and regulations and establishes procedures, not inconsistent with Title II of the Act (42 U.S.C. 401 et. seq.), which are necessary or appropriate to carry out certain provisions of the Act;

  • Adopts rules and regulations to govern the nature and extent of the proof and evidence and the method of taking and furnishing the same in order to establish the right to benefits under the Act;

  • Determines the coverage status of State and local government employees under a State’s Section 218 Agreement, Modifications to such Agreements, and the mandatory coverage provisions under Section 210 of the Act, for Social Security and Medicare benefit purposes;

  • Interprets, executes, and maintains Section 218 Agreements and Modifications to such Agreements;

  • Assures the accurate crediting of earnings to all workers, maintains accurate earnings records, verifies the earnings amounts provided, and corrects erroneously posted amounts, as required by law;

  • Permanently maintains custody of the States’ Section 218 Agreements, Modifications, and dissolutions; and

  • Permanently maintains custody of correspondence if it relates to the content of an Agreement or Modification (extent of coverage, deletions, corrections, dissolutions, etc.), a question or clarification involving the coverage extended by an Agreement or Modification, any other coverage matter, or changes in the names of State and local entities.

B. Internal Revenue Service (IRS)

IRS is responsible for the Social Security and Medicare taxation provisions under the Internal Revenue Code (IRC). Under the authority of Chapter 21 of the IRC, IRS:

  • Administers the Federal Insurance Contributions Act (FICA), including the mandatory Social Security and Medicare provisions concerning services performed by State and local government employees;

  • Assures proper reporting and collection of Social Security and Medicare taxes by State and local government employers under the FICA through examination and other compliance programs; and

  • Interprets the FICA provisions applicable to State and local governments through published guidance (e.g., regulations, revenue rulings, revenue procedures, private letter rulings, and field directives).

NOTE: 

Because IRS is responsible for administrating the provisions of FICA, SSA staff should refer all questions regarding the reporting and payment of FICA taxes to IRS.

Additionally, with respect to the Omnibus Budget Reconciliation Act of 1990 (OBRA90) provisions on mandatory Social Security coverage under Section 210 of the Act, SSA staff should refer all specific questions to IRS regarding:

  • What constitutes membership in a State or political subdivision employer's retirement system under Section 210?; and

  • What is a retirement system for purposes of Section 210?

SL 10001.130 State Social Security Administrator Responsibilities

SSA regulations require each State to designate at least one State official to administer its Section 218 Agreement (20 C.F.R. §404.1204). SSA refers to this official as the "State Social Security Administrator," or the "state administrator" for short.

A. Introduction to State Social Security Administrators

The regulatory requirement that States designate at least one state administrator allows coverage to be implemented effectively at the State level. The role of a state administrator is challenging, but through a cooperative relationship with SSA, the Internal Revenue Service (IRS), and the National Conference of State Social Security Administrators (NCSSSA) — every state administrator, whether experienced or inexperienced, is guaranteed access to a network of knowledge and resources.

B. Responsibilities of State Social Security Administrators

The state administrator is responsible for administering all aspects of Section 218 coverage, including interpreting its provisions and ensuring proper application of Social Security coverage to all State and political subdivision employees. The basic responsibilities of the state administrator are to:

1. Maintain Section 218 related records

The state administrator is responsible for maintaining Section 218 records permanently and securely. Destruction of original records is not authorized. In order to meet the records retention requirements, the state administrator shall:

  • Maintain the State’s original hardcopy file in a secure, waterproof, and fireproof environment. The hardcopy of the file shall include the State’s Section 218 Agreement, Modifications, dissolutions, and intrastate Agreements;

  • Maintain electronic or physical copies of each notice of a covered entity’s legal name change;

  • Maintain individual ballots from referendums for coverage (these documents may be stored in an electronic form as long as each individual ballot can be viewed, and the state administrator implements separate redundant secure storage to ensure no chance of accidental loss of the documents);

  • Maintain electronic and/or physical copies of letters and other forms of correspondence between the entities and the State, SSA, and IRS, that could affect coverage;

  • Consider implementing a redundant system to backup hardcopy files (e.g.; an electronic database of scanned files);

    NOTE: 

    If the state administrator chooses not to retain physical copies of ballots from referendums, then the administrator MUST implement separate redundant secure backup files of the electronic records of those ballots. SSA does not store ballot information and cannot assist the administrator with recovering those necessary documents if they are lost or destroyed.

  • Routinely back up electronic files, and store the backup files in a separate and secure location away from the originals; and

  • Routinely evaluate electronic and hardcopy files to insure the integrity of the documents.

2. Execute modifications

The state administrator must take appropriate steps to execute Modifications to the Agreement to include additional coverage groups, correct errors in coverage, or identify additional political subdivisions that join a covered retirement system (see generally SL 40001.420; SL 40001.425; SL 40001.445; SL 40001.450).

3. Conduct referendums

The state administrator must conduct referendums on the coverage of services of individuals in positions under a retirement system (see generally SL 30001.321; SL 30001.331).

4. Assist with coverage determinations and take coverage related actions

The state administrator assists SSA with making determinations about which State and political subdivision employees’ positions are covered by approved Section 218 Agreements and Modifications. Additionally, the state administrator identifies new, merged, or dissolved political subdivisions, and takes the appropriate coverage related action.

5. Guarantee appropriate withholding and reporting

The state administrator works with employers to guarantee proper Social Security and Medicare withholding and reporting.

6. Provide notice to SSA

The state administrator must give notice to SSA, when appropriate, of the following events:

  • State administrator changes—SSA regulations require each State to inform SSA of the name, title, and address of the designated official(s) and the extent of each official’s authority. When there are changes in designated officials or changes in their authority, the State should inform SSA timely. If there is a change in the state administrator, the outgoing state administrator should send a notice to the SSA regional office serving the state before leaving office and

  • Evidence of legal dissolution(s) of covered State or political subdivision entities (see SL 40001.425; SL 40001.485).

7. Communicate and collaborate with SSA, IRS, employers, and stakeholders

Communication is essential to performing the roles and responsibilities of the state administrator. However, to be effective, communication must flow clearly and consistently with all involved parties. This requires communication and interaction between the state administrator and every entity—including SSA, the IRS, and every reporting official for the State and its political subdivisions. State administrators should develop and maintain a communication plan. That plan may include contact with the following partners:

  • Other state administrators through the NCSSSA as needed and annually at the NCSSSA conference;

  • SSA regional offices as needed and at least quarterly;

  • IRS as needed and at least quarterly;

  • State and local governments as needed and at least quarterly;  

  • State’s political subdivisions (including those that do not have Section 218 Coverage Agreements) at least annually to secure current contact and mailing information including: current legal status, possible subdivision name changes, address changes, telephone and fax numbers, email address(es), and Federal Employer Identification Number(s) (EIN(s));

  • State government legislators and policy makers;

  • Public retirement systems; and

  • Oversight agencies, public employer associations, and other professional governmental associations as needed.

Additionally, the state administrators must collaborate with these parties at times to resolve issues. For example, state administrators should work with SSA and the IRS to address coverage and taxation questions related to the Agreement and any Modifications.

8. Provide guidance to employers

The state administrator should provide guidance to State and local government employers on issues related to Section 218 coverage.

9. Perform education and outreach

The state administrator is responsible for providing regular education and outreach to State and political subdivision employers and employees on coverage and benefits issues. A successful education and outreach program may:

  • Identify State and political subdivision employers, and create employer profiles that can be easily accessed as a source of information;

  • Organize, conduct, or participate in joint educational outreach with SSA and IRS for the State’s governmental employers and employees;

  • Identify political subdivisions not covered by a Section 218 Agreement that provides retirement system coverage to their employees to ensure the subdivisions understand their obligations and responsibility under mandatory Social Security or mandatory Medicare laws and provisions;

  • Send periodic letters to State and political subdivision entities asking if their Social Security coverage and retirement system status has changed;

  • Provide information (via newsletters, articles, and presentations) to the State’s political subdivisions concerning requirements of Section 218;

  • Develop email or website material for online client information exchange;

  • Network with governmental and professional associations, participate in conference committees, and offer to coordinate conference presentations;

  • Compile a State-specific coverage and reporting manual for use by the State’s public employers;

  • Develop ongoing contact and act as a liaison with the State’s congressional delegation, legislative, and executive branch officials and staff; and

  • Monitor for State and local proposed legislation that could potentially affect the Social Security, Medicare, and retirement system coverage of government employees.

10. Assist with closing agreements

For Modifications requiring a closing agreement (see SL 40001.420J), the state administrator assists the relevant entities with completing a closing agreement with IRS. The state administrator should do this after the regional office Section 218 specialist (RO Specialist) notifies the state administrator that the Modification has been approved and that the IRS has been made aware of the need for a closing agreement. Once the closing agreement has been completed, the state administer should request a copy of the approved closing agreement from the entity, to be retained with the State’s copy of the Modification (see SL 40001.420J and SL 40001.425D). The state administrator should provide SSA with a copy of the approved closing agreement.

11. Determine necessary funding

The state administrator is responsible for determining the level of support needed by its State and covered political subdivisions, pursuant to existing State statutes, and ascertaining the administrative costs for operating the Section 218 coverage program. The state administrator should make recommendations to the appropriate State authorities to ensure adequate funding to administer the State's coverage Agreements.

12. Determine necessary staffing

The state administrator is responsible for evaluating and maintaining staffing levels commensurate with Section 218 program objectives and activities. The state administrator position, as well as the duties and responsibilities associated with the position, are a mandatory responsibility of the State—as specified in SSA Regulations (see 20 C.F.R. § 404.1024). In order to determine the adequate staffing level for the state administrator position, the State should analyze the coverage needs of the State and its political subdivisions. Consider doing the following:

  • Identify goals and objectives that align with the roles and responsibilities of the state administrator position;

  • Identify the State’s political subdivisions (including those that do not have Section 218 coverage) and begin developing specifications for the type, numbers, and locations of employees;

  • Assess the current and the projected coverage needs of the State and political subdivision employees;

  • Identify the possible methods for meeting the coverage needs of State and political subdivision employees;

  • Determine the staffing requirements necessary to implement the ideas identified;

  • Develop a method for rating the effectiveness of staff and then monitor the effectiveness of current staffing levels; and

  • Staff the position to meet the Social Security coverage needs of State and political subdivision employees.

In addition, the state administrator should implement a comprehensive succession plan. Succession planning is the mitigating process of preparing for the loss of critical personnel in an organization. When developing a succession plan, begin with an assessment. The assessment should identify positions in which a vacancy would have the highest impact on administering Section 218 coverage for the State and its political subdivisions.

13. Understand the legal framework

It is important that state administrators understand Federal and State law in order to identify coverage issues and work with SSA and IRS to resolve those issues. As a rule, Federal law governs determinations involving coverage of State and local government employees, while State laws govern issues involving the interpretation of functions of the State and its political subdivisions. SL 20001.220 provides further details on which issues Federal or State law control.

If it is unclear whether an issue requires a Federal or State determination, consider contacting the appropriate Social Security regional office. If additional guidance is needed, consider obtaining a legal opinion or other guidance from the State’s Office of the Attorney General.

14. Develop program strategies

The state administrator should develop a comprehensive program strategy for addressing the State’s Section 218 program goals. This strategy should:

  • Standardize and simplify Section 218 services;

  • Develop performance standards based on State and local government needs;

  • Apply technology to aggressively automate routine tasks, data maintenance, and client interface;

  • Create a task group to identify the Social Security needs of State and local government employees;

  • Develop an outreach strategy for participating in public events, providing training, and disseminating Social Security coverage materials for State and local employers and employees; and

  • Facilitate support for the State's Section 218 program from State legislators and executives.

15. Advocate on behalf of the State Social Security Administrator position

The state administrator may request SSA send a letter to the State Governor advocating for the State Social Security Administrator position on a case-by-case basis to reinforce the ongoing services of the state administrators. The state administrator should direct the request to the SSA regional office servicing the State. The regional office retains the discretion to determine if sending a letter is appropriate following a request from the state administrator (see POMS SL 10001.140A).

C. Resources for administering Section 218 policies

The State and Local Coverage Handbook POMS (SL POMS) is the primary resource for administering Section 218 policies. In addition to the SL POMS, the state administrator should routinely use the following resources:

1. Agency and organization websites

SSA, State and Local Government Employers (SLGE)

This SSA site is specifically for Social Security coverage issues related to State and local government employers and employees. This site contains information about how public employees are covered for Social Security and Medicare, frequently asked questions, laws and regulations, publications, who to contact, and related web links that assist with understanding the Social Security and Medicare coverage and reporting requirements for public employees.

National Conference of State Social Security Administrators

Since its formation in 1952, the NCSSSA has worked closely with SSA and IRS to address Social Security and Medicare coverage and employment tax issues raised by State and local government employers and State Social Security Administrators throughout the United States. The NCSSSA works with federal officials to ensure legislative and regulatory changes address State and local concerns, and the NCSSSA provides leadership to State and local governments.

Tax Information for Federal, State, and Local Governments

This IRS site is for Tax Information for Federal, State, and Local Governments and is a source of information for ensuring compliance with federal employment tax laws by governmental entities.

2. Legal citations

Section 218 of the Social Security Act

This portion of the Act explains that the Commissioner of Social Security shall, at the request of any State, enter into an Agreement with such State for the purpose of extending the insurance system established by this title to services performed by individuals as employees of such State or any political subdivision of such State.

Section 210 of the Social Security Act

This portion of the Act defines employment.

Section 3101 of the Internal Revenue Code

This portion of the IRC relates to the way that employment taxes are imposed.

Section 3121 of the Internal Revenue Code

This portion of the IRC relates to what types of remuneration constitute wages.

20 C.F.R. §§ 404.1200 et seq.

This portion of the Code of Federal Regulations addresses Social Security coverage of employees for State and local governments.

20 C.F.R. § 404.1020

This portion of the Code of Federal Regulations addresses work performed for States, their political subdivisions, and instrumentalities.

3. Publications

IRS, Publication 963: Federal-State Reference Guide (Pub. 963)

The IRS Federal-State Reference Guide provides State and local government employers a broad overview of Social Security and Medicare coverage and FICA tax withholding issues.

NCSSSA Handbook

This is a guide developed by the National Conference of State Social Security Administrators for new state administrators.

4. Fact sheets

SSA Publication No. 05-10007

This fact sheet explains the Government Pension Offset (GPO).

SSA Publication No. 05-10045

This fact sheet explains the Windfall Elimination Provision (WEP).

SSA Publication No. 05-10051

This fact sheet explains how Social Security and Medicare cover State and local government employees.

5. Miscellaneous

SSA.gov

This is Social Security’s homepage, which features a “Newsroom” section linking to SSA’s Blog, Newsletter, Press Releases, and Social Media.

IRS, News for Federal, State, and Local Governments

This is a periodic IRS newsletter about current developments and upcoming events of interest for government entities.


SL 10001 TN 4 - Introduction - 1/29/2020