Identification Number:
SL 20001 TN 1
Intended Audience:See Transmittal Sheet
Originating Office:ORDP OISP
Title:Section 218 Program
Type:POMS Transmittals
Program:All Programs
Link To Reference:
 

PROGRAM OPERATIONS MANUAL SYSTEM
Part SL – State and Local Coverage Handbook
Chapter 200 – Section 218 Program
Subchapter 01 – Section 218 Program
Transmittal No. 1, 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 20001.201 Introduction to Section 218 and State and Local Coverage

  • We renamed the section to “Introduction to Section 218 and State and Local Coverage” from “Program Overview.”

  • We incorporated non-duplicative content concerning this history of Section 218 from SL 10001.130 into the overview section, because it largely was addressed in this section already and it seemed to be more appropriate to be incorporated into this section.

  • We renamed subsection A, restructured the sentences, and clarified some of the content. We also took out “60” and replaced it with “a number” of interstate instrumentalities, to be more generic so the POMS remains accurate even if the actual number changes. We also added a citation for mandatory coverage under the Act.

  • We renamed subsection B and folded in content previously found in RS 01505.001. We merged subsection B of RS 01505.001 with this section and as well as adding the corresponding Public law citations and correcting dates for the timeline of relevant dates and facts for State and local coverage.

  • We merged subsection C of RS 01505.001 into SL 30001.303. We will archive RS 01505.001. We added “under FICA” to the end of the 1986 summarized changes.

SL 20001.210 Determinations Regarding Section 218 Agreements

We archived this section and folded the content into SL 30001.301B.

SL 20001.220 When Federal and State Laws Apply

  • We added a clarifying statement regarding State’s attorney general interpretation to make clear that SSA will generally defer to that interpretation unless SSA finds a determination to be unsupportable, consistent with later provisions of POMS, including SL 30001.301B.

  • We added a reference to section RS 02101.810 SSA and IRS Responsibilities for Employment Determinations for the first question “does an employer-employee relationship exist?” under “federal law” for clarity. We rephrased the wording of the second paragraph for active voice and clarity. We added citations for the relevant C.F.R. sections for the federal law section.

SL 20001.230 Federal-State Agreements

We archived this section, and folded the content into SL 30001.301A.

SL 20001.240 Negotiations between the State and the Political Entity

We archived this section and folded into newly created subsection SL 30001.301C.

SL 20001.250 Period of Limitation Ends on Non-Work Day

We archived this section and folded into newly created subsection SL 30001.301D.

SL 20001.260 Individual's Right to Appeal

We archived this section, as the content does not pertain specifically to Section 218 coverage. This section is more for claims benefits, and this material is already covered in the GN sections.

SL 20001.270 Employer’s Right to Appeal

We archived this section and folded into newly created Note in subsection SL 80001.801A2.

Conversion Table
Old POMS ReferenceNew POMS Reference
SL 20001.210SL 30001.301
SL 20001.230SL 30001.301
SL 20001.240SL 30001.301
SL 20001.250SL 30001.301
SL 20001.260Archived
SL 20001.270SL 80001.801

SL 20001.201 Introduction to Section 218 and State and Local Coverage

A. Overview

State and local government employees may be covered for Social Security and Medicare through a Section 218 Agreement between the State and the Social Security Administration (SSA) or mandatorily under Section 210(a)(7)(F) of the Social Security Act (Act).

The original Act of 1935 did not extend Social Security coverage to State and local government employees, because there was a legal question regarding the Federal government’s authority to tax State and local governments. However, because many government employers did not have their own retirement system, Congress amended the Act in 1950, and created Section 218 of the Act (codified at 42 U.S.C. § 418). Since it became effective on January 1, 1951, Section 218 of the Act has permitted States to cover State and local employees' positions voluntarily through an Agreement with SSA. Over time, Congress has expanded the scope of these Agreements to give States more flexibility to cover their employees.

To date, all 50 States, Puerto Rico, the Virgin Islands, and a number of interstate instrumentalities have entered into Section 218 Agreements with SSA to cover at least some of their State and local employees. This is equivalent to providing Social Security and Medicare or Medicare-only coverage to approximately 22 million employees.

B. Timeline

The following is a chronology of relevant dates and facts throughout the history of State and local coverage:

  • 1950: On August 28, 1950, Section 218 of the Act was enacted, allowing states, voluntarily, to extend Social Security coverage to governmental employees not covered under a retirement system by entering into a Section 218 Agreement (P.L. 81-734, Section 106).

  • 1954: The Social Security Amendments of 1954 expanded the Act to allow states to extend Social Security coverage to state and local government employees who were members of a public retirement system (except police officers and firefighters), provided coverage was authorized by the state and approved through a voluntary referendum of all retirement system members (P.L. 83-761, Section 101).

  • 1956: The Social Security Amendments of 1956 authorized certain states to divide a retirement system and cover only those members who voted for coverage, and all new members. Additional States have been authorized to use this procedure through subsequent amendments to Section 218 (P.L. 84-880, Section 104).

  • 1965: Medicare was legislated and employees covered by Social Security were automatically covered for Medicare Hospital Insurance (HI). This included employees covered under a Section 218 Agreement (P.L. 89-97, Section 101).

  • 1983: Before 1983, States could terminate Social Security coverage for employees covered under the States' Section 218 Agreements. The 1983 Social Security Amendments rescinded this provision of the Act and prohibited States from terminating coverage beginning April 20, 1983 (P.L. 98-21, Section 103).

  • 1986: Medicare coverage became mandatory for State and local government employees hired or rehired after March 31, 1986 (P.L. 99-272, Section 13205).

  • 1987: Prior to 1987, SSA and the States were responsible for collecting Social Security and Medicare payments from governmental employers. Effective January 1, 1987, that responsibility shifted to the Internal Revenue Service (IRS). Governmental employers now pay Social Security and Medicare taxes directly to the IRS under the Federal Insurance Contributions Act (FICA) (P.L. 99-509, Section 9002).

  • 1991: On July 2, 1991, Social Security and Medicare coverage became mandatory for State and local government employees who were not members of a public retirement system under IRS rules and who were not covered under a Section 218 Agreement (P.L. 101-508, Section 11332).

  • 1994: On August 16, 1994, all States were authorized to extend Social Security and Medicare-only coverage to police officers and firefighters covered by a retirement system. Prior to this date, only certain States could cover the services of these positions (P.L. 103-296, Section 305).

  • 2004: The Social Security Protection Act of 2004 was enacted, requiring state and local government employers to disclose the effect of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) to employees hired on or after January 1, 2005, in jobs not covered by Social Security. Employers must provide this disclosure using Form SSA-1945, Statement Concerning Your Employment in a Job Not Covered by Social Security (P.L. 108-203, Section 419).

SL 20001.220 When Federal and State Laws Apply

Federal law governs determinations involving coverage of State and local government employees. These determinations may be based on decisions regarding specific issues to which Federal law is applied and other issues to which State law is applied. It is important to know whether Federal or State law is applied in making a determination on a specific issue.

Generally, the State's attorney general (or other legal officer, as appropriate) resolves questions involving interpretation or application of State law in accordance with relevant State and local laws, regulations, and the State court decisions. SSA will generally defer to an interpretation by a State’s attorney general unless SSA finds that determination to be unsupportable. SSA may make these determinations as part of administering the Section 218 program where a State’s attorney general is unwilling to provide guidance, or fails to do so in a reasonably timely manner.

Listed below are the more significant issues that will require such determinations and the authority under which the State or SSA makes such determinations:

  • Federal Law

  • State Law

    • Who is an officer of a state or political subdivision?

    • Is an entity a political subdivision?

    • What is the legal status of a new entity?

    • Is a function governmental or proprietary?

    • Is a position under a retirement system?

    • Which employees are eligible for membership in a retirement system?

    • Who is an employee for purposes of retirement system participation?

    • What is the definition of a police officer or firefighter position?


SL 20001 TN 1 - Section 218 Program - 1/29/2020