If an absolute coverage group covers services performed in a position, coverage continues even if the position subsequently comes under a retirement system. This rule includes police officer and firefighter positions that come under a retirement system after the State obtains coverage with an absolute coverage group.

The State specifies at the time coverage is provided for ineligibles whether coverage will continue or terminate if an ineligible later becomes eligible for membership in a retirement system.

A position covered as part of a retirement system coverage group continues to be covered even if:

1. 1. 

   The position is later covered under additional retirement systems;

2. 2. 

   The position is later removed from coverage under a retirement system; or

3. 3. 

   The retirement system is abolished with respect to the positions.

In addition to the general rules for majority vote retirement system coverage groups noted above, where a State uses divided-vote procedures to establish the retirement system coverage, a position continues to be covered unless it is removed from the retirement system and is no longer occupied by a member who chose coverage or by a new member.

The proper application of the continuing employment exception (SL 50001.510A) and the continuation of coverage rules can cause some confusion when dealing with the Medicare HI-only divided-vote referendum of a State employee who transfers between agencies and entities within the State government system. The same holds true for the Medicare HI-only divided-vote referendum of a political subdivision employee who transfers between agencies and entities of the same political subdivision.

In order to determine correctly whether a State or local government employee carries his or her vote when transferring between jobs, it is important to delineate a few factors and determine what role they play. The principal factors to consider are:

1. 1. 

   Was the individual a bona fide employee and performing regular and substantial services for the State or political subdivision employer before April 1, 1986?

2. 2. 

   Was the transfer from one State employer to another State employer of the same State made without termination of the overall employment relationship with the State?

   1. a. 

      For an individual who transferred from a political subdivision employer to another employer of the same political subdivision, was the transfer made without termination of the overall employment relationship with the political subdivision?

3. 3. 

   Is the continuing employment exception applicable, which exempts the individual from the mandatory Medicare provisions (SL 50001.510)? This requires the State to determine whether the following two conditions are met:

   1. a. 

      Was the employee transferring from one State employer to another employer of the same State and

   2. b. 

      Did the transfer not result in terminating the overall employment relationship with the State (it could not be terminated after March 31, 1986 (P.L. 99-272, Section 13205; SL 50001.510))?

4. 4. 

   Is there continuation of coverage (SL 30001.380)?

The scenarios below deal with employees who voted in Medicare HI-only referendums. As far as employment for the original government employer is concerned, the individuals discussed in the scenarios will be considered employees who were hired and performing substantial services for the employer before April 1, 1986. It will be presumed that in each of the scenarios below the answer to Factor 1 is “Yes.”

Scenario 1: Dawn Smith was an employee of a State agency (not an institution of higher learning) who voted for Medicare coverage in the referendum. She later transferred to a job in another State agency (not an institution of higher learning) but under the same retirement system as her former position. Does Ms. Smith carry her Medicare referendum vote?

In this case, since Factor 1 is fulfilled, one should then determine if the continuing employment exception (Factor 3) applies based upon the conditions noted above. Scenario 1, as presented, does fulfill Part a; but it is unclear whether it would fulfill Part b.

If the transfer did terminate the overall employment relationship with the State, then the continuing employment relationship exemption would not apply, and Ms. Smith would be considered a “new hire” as far as the current State employer is concerned and would fall under the mandatory Medicare provisions.

If the transfer did not terminate the overall employment relationship with the State, then Part b would be fulfilled and the continuation of employment exception to mandatory Medicare would apply. In other words, Ms. Smith would not fall under the mandatory Medicare provisions.

If the employee has fulfilled the requirements for the continuing employment exception, then SSA looks at the continuation of coverage aspects.

In Scenario 1, both former and current State agency employers are under the same retirement system, and since neither is an institution of higher learning, the retirement system employees of both agencies would also have received Medicare coverage via the same referendum (or same deemed retirement system) (see SL 30001.321). Thus, Ms. Smith would then carry her vote into the new position.

Scenario 2: Peter Bennett was an employee of a State agency who voted for Medicare coverage in the referendum. He later transferred to a job in another State agency but under a different retirement system from that of his former position. Does Mr. Bennett carry his Medicare referendum vote?

Since Factor 1 is fulfilled, one should then determine if the continuing employment exception (Factor 3) applies based upon the conditions noted above. Scenario 2, as presented, does fulfill Part a; but it is unclear whether it would fulfill Part b.

If the transfer did terminate the overall employment relationship with the State, then the continuing employment relationship exemption would not apply, and Mr. Bennett would be considered a “new hire” as far as the current State employer is concerned and would fall under the mandatory Medicare provisions.

If the transfer did not terminate the overall employment relationship with the State, then Part b would be fulfilled and the continuation of employment exception to mandatory Medicare would apply. In other words, Mr. Bennett would not fall under the mandatory Medicare provisions.

If the employee has fulfilled the requirements for the continuing employment exception, then SSA looks at the continuation of coverage aspects.

Although both former and current employers are government agencies of the same State, each agency has a different retirement system providing coverage for their respective employees. With his transfer to the current employer, Mr. Bennett is now under the jurisdiction and rules of the retirement system of the current employer; thus, his Medicare referendum vote in the retirement system of the former employer would not carry over to the new position. If Mr. Bennett meets the continuing employment exception, he would not have Medicare coverage unless the current employer’s retirement system is covered for Social Security by a Section 218 Agreement or has provided Medicare-only coverage for pre-April 1, 1986 hires through a Medicare-only referendum.

Scenario 3: Linda Taylor was a retirement system covered employee of a State Institution of Higher Learning (State University) who voted for Medicare coverage in the referendum. The State University was covered for Medicare as a “deemed retirement system group” separate from the rest of the State government positions. Subsequently, Ms. Taylor moved to a non-State University position with a State Agency that was covered by the same retirement system. Employees in both positions are State employees. Because the State University was originally covered as a “deemed retirement system group” separate from the rest of the positions of the same retirement system, does Ms. Taylor carry her vote?

Since Factor 1 is fulfilled, one needs to determine whether the continuing employment exception (Factor 3) applies based upon the conditions noted above. Scenario 3, as presented, does fulfill Part a; but it is unclear whether it would fulfill Part b.

If the transfer did terminate the overall employment relationship, then the continuing employment relationship exemption would not apply, and Ms. Taylor would be considered a “new hire” as far as the current State employer is concerned and would fall under the mandatory Medicare provisions.

If the transfer did not terminate the overall employment relationship with the State, then Part b would be fulfilled and the continuation of employment exception to mandatory Medicare would apply. In other words, Ms. Taylor would not fall under the mandatory Medicare provisions.

If the employee has fulfilled the requirements for the continuing employment exception, then SSA looks at the continuation of coverage aspects.

In Scenario 3, both former State University and current State Agency employers are under the same retirement system, but in this situation the State Institution of Higher Learning (State University) obtained Medicare coverage as a “deemed retirement system group” separate from the rest of the State government agencies covered by the same retirement system—Medicare coverage was obtained for the State University via a separate Medicare referendum from the rest of the State government—as permitted in SL 30001.321 and SL 30001.331

At this point, one would need to refer to SL 30001.334F.2 (Change in Employment), which states:

If the retirement system which was divided was not the entire system, a member of a deemed retirement system who transfers to another deemed system is a “new” member and is compulsorily covered…If a member of a deemed retirement system transfers to a position under a retirement system which has not been covered, a referendum must be held before he or she can be covered.

As the result of a coverage referendum (either divided or favorable majority), “new” members of the retirement system are compulsorily covered. In a divided referendum situation, a transferee whose former position was in another deemed retirement system would be treated as a “new” member of the retirement system in their current position with the State. The transferee would be placed in the “yes” group (provided a coverage referendum has been held) regardless of how he or she had voted in their previous position with the State. If the retirement system of the current employer has not yet obtained Medicare coverage for pre-April 1, 1986 hires, then the transferee would no longer have Medicare coverage.

It had been established that the retirement system positions at the State University were covered for Medicare as a “deemed retirement system” separate from the retirement system positions in the rest of the State government. Thus, Ms. Taylor would not carry her vote when transferring from a retirement system position at the State University to a retirement system position at another State government agency. In her current position with the State Agency, Ms. Taylor would either be given Medicare coverage if there was a favorable majority or divided vote Medicare referendum for pre-April 1, 1986 hires of the State Agency retirement system, or she would lose Medicare coverage if the State Agency retirement system does not have Medicare coverage for pre-April 1, 1986 hires.

Scenario 4: Same as Scenario 3, both current and former employers are entities within the same State government, except each entity is covered by a different retirement system. Jeffrey Merrill was a retirement system covered employee of a State Institution of Higher Learning (State University) who voted for Medicare coverage in the referendum. The State University was covered for Medicare as a “deemed retirement system group” separate from the rest of the State government positions. Subsequently, Mr. Merrill moved to a non-State University position with a State Agency that was covered by a different retirement system. Employees in both positions are State employees. Does Mr. Merrill carry his vote?

Scenario 4 actually resembles Scenario 2. As in Scenario 2, SSA first must consider whether the continuing employment exception (Factor 3) applies based upon the conditions noted above. Scenario 4, as presented, does fulfill Part a; but it is unclear whether it would fulfill Part b.

If the transfer did terminate the overall employment relationship, then the continuing employment relationship exemption would not apply, and Mr. Merrill would be considered a “new hire” as far as the current State employer is concerned and would fall under the mandatory Medicare provisions.

If the transfer did not terminate the overall employment relationship with the State, then Part b would be fulfilled and the continuation of employment exception to mandatory Medicare would apply. In other words, Mr. Merrill would not fall under the mandatory Medicare provisions.

If the employee has fulfilled the requirements for the continuing employment exception, then SSA looks at the continuation of coverage aspects.

Although both the former employer (the State University) and the current employer (State Agency) are government agencies of the same State, each agency has a different retirement system providing coverage for their respective employees. With his transfer to the current employer, Mr. Merrill is now under the jurisdiction and rules of the retirement system of the current employer; thus, his Medicare referendum vote in the retirement system of the former employer would not carry over to the new position. If Mr. Merrill meets the continuing employment exception, he would not have Medicare coverage unless the current employer’s retirement system is covered for Social Security by a Section 218 Agreement or has provided Medicare-only coverage for pre-April 1, 1986 hires through a Medicare-only referendum.

Scenario 5: An employee of the State moves to a political subdivision or vice versa; both former and current positions are covered by the same retirement system. Does the employee carry his or her vote?

In Scenario 5, one must first consider whether the continuing employment exception (Factor 3) applies based upon the conditions noted above. Scenario 5 presents the employee moving from State government employment to a political subdivision government position or vice versa. To move from State government employment to political subdivision employment (or vice versa) requires the termination of the employment relationship with the former employer, despite the fact that both the former and current job positions are covered by the same retirement system. Because the continuing employment exception would not be met, the employee would be considered a “new hire” and mandatory Medicare would apply in the new position (SL 50001.510).

Scenario 6: An employee of the State moves to a political subdivision or vice versa; the former and current positions are covered by different retirement systems. Does the employee carry his or her vote?

No, the employee would not carry his or her vote. As in Scenario 5, the employment relationship with the government employer terminated after March 31, 1986. SL 50001.510 expressly states that an employee who transfers from a State employer to a political subdivision employer (or vice versa) becomes a “new hire” of the governmental entity for whom he or she is now working. The continuing employment exception would not be met, and the employee would either be mandatorily covered for Medicare or compulsorily covered if the retirement system under which he or she now works has Social Security coverage based on a Section 218 Agreement.