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

TN 8 (01-20)

SL 30001.375 Effective Dates of Coverage

CITATIONS:

Social Security Act, Section 218(e)

The effective date of coverage is the date specified by the State in the Agreement or Modification for coverage to begin. A different effective date may be specified for each coverage group listed in the Agreement or Modification. When additional services are covered, the effective date of coverage cannot be earlier than the date specified for the coverage group that includes those added services.

The effective date of coverage for employees choosing coverage under the "second chance procedure" (see SL 30001.335) must be the same date as the effective date for the retirement system coverage group that includes those added services.

An earlier effective date can be established for a coverage group already covered under an Agreement. As discussed in the following subsections, provisions of Federal and State laws govern the extent of additional retroactivity.

NOTE: 

The effective date of coverage may not be changed to a later date, except to correct an error.

A. The effective date for purposes of establishing a period of retroactive coverage

1. Beginning April 7, 1986

Section 218(e)(1) of the Act permits a State to elect a retroactive effective date. Beginning April 7, 1986, the date the Agreement or Modification is mailed or delivered by other means to the Social Security Administration (SSA) is used as a basis to calculate the effective date.

Section 218(e)(1) provides that the effective date may not be earlier than the last day of the sixth calendar year preceding the year in which the Agreement or Modification is mailed or delivered by other means to SSA. Because coverage begins the day after the effective date, Section 218(e)(1) authorizes five full calendar years of retroactive coverage—beginning on January 1—preceding the year in which the Agreement or Modification is mailed or delivered, regardless of what day of the year that mailing or delivery occurs.

This rule also provides the State with certainty about the effective date for a Modification, without regard to any gap in time between the date SSA received the Modification and the date that SSA executed the Modification.

2. January 1, 1961 through April 6, 1986

Before April 7, 1986, the State could choose five years of retroactive coverage, but the calculation of the effective date was based on the date that SSA executed the Agreement or Modification.

This rule created the possibility that a State could lose one year of retroactive coverage if a Modification was mailed by a State to SSA in one year, but was not executed by SSA until the following year. This often happened where the Modification was mailed to SSA in November or December.

3. Agreements executed before 1961

 Generally, the following retroactive coverage dates were available based on the execution date of the Agreement or Modification:

  • •

    Executed before 1954: retroactive coverage possible to January 1, 1951;

  • •

    Executed during 1954: retroactive coverage possible to January 1, 1954;

  • •

    Executed during 1955, 1956 or 1957: retroactive coverage possible to January 1, 1955; or

  • •

    Executed during 1958, 1959 or 1960: retroactive coverage possible to January 1956

NOTE: 

Coverage of services in positions under a retirement system could not begin before 1955. After 1954, the rules above are applicable

Notwithstanding the general rules, the following special rules applied to particular types of positions:

  • •

    National Guard units—Modifications for coverage of absolute coverage groups of civilian employees of State National Guard units could be retroactive to January 1, 1951, if executed prior to January 1, 1956, but after 1955, the rules above apply;

  • •

    Retirement system ineligibles—coverage of individuals ineligible for membership in a retirement system could not begin earlier than January 1, 1955;

  • •

    Agricultural inspectors—coverage of agricultural inspectors could not begin earlier than January 1, 1955; and

  • •

    Positions removed from coverage under a retirement system—coverage of individuals in positions removed from coverage under a retirement system by an action started prior to September 1, 1954, could not begin earlier than January 1, 1955, and the Modification had to be executed prior to 1958.

B. The controlling date for purposes of establishing who is entitled to retroactive coverage

For Agreements or Modifications executed after August 28, 1958, Section 218(e)(2) of the Act permits a State to designate a controlling date for purposes of establishing who is entitled to retroactive coverage. Retroactive coverage will apply to those individuals employed on the controlling date. The controlling date is distinct from the effective date, which determines the date on which retroactive coverage begins. The controlling date cannot be earlier than the date the Agreement or Modification is mailed or otherwise delivered to SSA. If the State does not designate a controlling date, then it becomes the date SSA executes the Agreement or Modification.

For Error Modifications (see SL 40001.450), the date of the error is the date that controls who is entitled to retroactive coverage. If the error involves erroneous reporting to the Internal Revenue Service (IRS), the effective date of coverage is the first day of the first period for which the erroneous reports were made to IRS, if State law permits that determination.

1. Current employees

Only employees who are members of the coverage group and in an employment relationship with the covered entity on the controlling date are covered for any retroactive period. Such an employee would be covered as follows:

  • •

    Absolute coverage group—employee obtains coverage for that part of the retroactive period in which the employee worked and received wages;

  • •

    Retirement system coverage group (majority-vote or divided-vote)—employee obtains coverage for that part of the retroactive period in which the employee worked and received wages in a position under the system; and

  • •

    Ineligibles—employee obtains coverage for that part of the retroactive period in which the employee worked and received wages in a position under the retirement system, but it cannot be earlier than the date of employee’s first ineligibility.

2. Terminated, retired, or deceased employees

Services performed by an individual whose employment relationship was terminated by death, retirement, or otherwise, during the interval between the effective date of coverage and the controlling date are not covered for the retroactive period.

NOTE: 

Notwithstanding this rule, see SL 30001.375D for preserving retroactive coverage under Section 218 for former employees where reports were erroneously made to IRS or to SSA without coverage under a Section 218 Agreement.

3. Employees terminated and rehired

Services performed by an individual whose employment relationship was terminated before the controlling date, but who was rehired before that date, are retroactively covered.

Services of an individual whose employment relationship terminated before the controlling date, but who was rehired after that date, are not retroactively covered. Coverage would begin on the date the individual was rehired.

4. Employees who change employers under the same retirement system

Services performed by an employee who changed employers during the retroactive period but the employee occupies a position in the same retirement system coverage group under the new employer on the controlling date are covered for the retroactive period. This is true even though there is a break in the continuity of the employee’s employment, provided the employee is in an employment relationship on the controlling date.

5. Former employees

Ordinarily only those individuals who are in an employment relationship on the controlling date receive coverage for the retroactive period. However, where employees who were part of a coverage group for whom there were past erroneous reports to IRS or SSA, coverage for their services may be preserved although they are not currently in an employment relationship.

Under certain conditions, the State may use an error Modification to provide coverage as of the date on which the error occurred. Another way to preserve coverage for former employees is to include those employees who had been part of the coverage group and whose earnings had been erroneously reported as a part of the coverage group, provided no tax refund had been obtained. The State may, by deeming former employees to be part of the coverage group on the controlling date, give them whatever retroactive coverage is provided to current employees.

C. Designating separate retirement systems to establish different effective dates

Generally, there can be only one effective date of coverage for a coverage group. However, if a retirement system covers the positions of employees of the State and one or more political subdivisions or the employees of two or more political subdivisions, the State may take one of the following actions if it has not designated different retirement systems for purposes of the referendum:

  • •

    Choose a single effective date for all members of the coverage group;

  • •

    Choose a different effective date for any one or any combination of the political subdivisions; or

  • •

    Choose a different effective date for the State or for the State and any one or more of the political subdivisions.

These choices are available for Agreements and Modifications entered into on or after September 13, 1960.

When there are different effective dates, an employee will receive retroactive coverage only for his or her services with the entity that employs him or her on the date that controls retroactivity and only to the extent the Agreement provides retroactive coverage for the employees of that entity. The State may provide additional retroactive coverage for employees who work at different times for more than one of the employers included in the coverage group.

This provision applies only to effective dates. In other respects, there is no change in the retirement system coverage group. One referendum must be held for the entire system. The Modification extends coverage to all employees in positions under the system. The optional exclusions taken and the date designated to control retroactive coverage apply to the entire coverage group. Employees whose positions are brought under the retirement system after the Modification are automatically covered.

D. Additional retroactivity by tacking

1. General

It is possible for a State to provide an employee with additional retroactive coverage by "tacking" services onto the employee’s coverage that the employee performed in the retroactive period for entities that are not a part of the employee’s coverage group. Tacking requires the State to agree in writing to treat all similarly situated employees the same way.

We only permit tacking if the services to be tacked are for entities covered under the Agreement or for entities whose coverage was terminated because of dissolution. If a divided-vote retirement system is involved, the employee has a choice as to whether he or she wants his or her services tacked. This is the only situation where the individual may exercise a choice in tacking.

2. Tacking procedure and Agreement

The State tacking Agreement must be in writing. The following tacking Agreement example may be adapted to fit specific tacking situations:

State of _______________ Tacking Agreement

It is hereby agreed that any employee whose services were covered during a retroactive period by Modification No. ____ shall receive credit for any employment that would have been covered had he or she not changed employers, provided he or she was in an employment relationship with an employer listed in Modification No. ___________ on __________ (the date designated pursuant to Section 218(e)(2) of the Act in Modification No. __________).

______________________________________________

(Signature of Authorized State Official and Date)

3. Modification and reporting information

List the current entity to which coverage is to be tacked in the Modification providing coverage. If the services to be tacked are for an entity that was covered before its dissolution or consolidation, the wages for the retroactive period should be reported under the name and the Federal Employer Identification Number (EIN) of the entity that actually paid the wages.

The State should attach to the Modification a list showing the name and address of the entity no longer in existence, and the period during which the dissolved entity had employees now employed by the current entity.

To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1930001375
SL 30001.375 - Effective Dates of Coverage - 01/29/2020
Batch run: 02/03/2020
Rev:01/29/2020