Employees who have been continuously employed with the employer since before April 1, 1986, remain exempt from mandatory Medicare taxes and corresponding coverage unless either: (1) the State has voluntarily covered their positions using an HI-only Agreement (SL 30001.395), or (2) the employee is currently subject to the mandatory Social Security provisions under Section 210 (SL 50001.501). In the absence of Social Security coverage, these employees may not make Medicare contributions.

For purposes of this exception, SSA considers the employee to be continuously employed if all of the following requirements are met:

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  The employee was performing regular and substantial services for remuneration for the State or political subdivision employer before April 1, 1986;

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  The employee was a bona fide employee of that employer before April 1, 1986;

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  The employment relationship with that employer was not entered into for purposes of avoiding the Medicare tax;

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  The employment relationship with that employer has been continuous since before April 1, 1986; and

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  For services performed after July 1, 1991, the employee was not subject to mandatory Social Security coverage for the time period corresponding to those services (see SL 50001.501).

An employee hired before April 1, 1986, by a State employer and who transfers on or after April 1, 1986, to another State employer of the same State qualifies for the continuing employment exception, provided the transfer was made without a termination of the employee’s overall employment relationship with that State. The same rule applies to an employee hired before April 1, 1986, by a political subdivision employer, who transfers on or after April 1, 1986, to another employer of the same political subdivision.

However, an employee hired before April 1, 1986, does not qualify for the continuing employment exception if on or after April 1, 1986, the employee transfers from a State employer to a political subdivision employer, or from a political subdivision employer to a State employer. Likewise, an employee does not qualify for the exception if the employee transfers from a political subdivision employer in one political subdivision to a political subdivision employer in a different political subdivision.

The following services are not subject to mandatory Medicare coverage even though the services are performed by an employee hired after March 31, 1986:

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  Services performed by individuals hired to be relieved from unemployment (this does not include many programs financed from Federal funds where the primary purpose is to give the employee work experience or training);

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  Services performed in a hospital, home, or other institution by a patient or inmate of such institutions as an employee of a State or local government employer;

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  Services performed by an employee on a temporary basis in case of fire, storm, snow, earthquake, volcano, flood, or other similar emergency;

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  Services performed by non-resident aliens with F-1, J-1, M-1, and Q-1 visas;

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  Services in positions compensated solely by fees that are subject to the Self-Employment Contribution Act (SECA), unless a Section 218 Agreement covers these services;

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  Services performed by a student enrolled and regularly attending classes at the school, college, or university where they are working, unless a Section 218 Agreement covers student services;

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  Services performed by an election worker or official whose pay in a calendar year is less than the amount mandated by law, unless a Section 218 Agreement covers election workers (to find the coverage status of election workers for each State, see the Election Worker Coverage Chart); and

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  Services that would be excluded if performed for a private employer because it is not work defined as employment under Section 210(a) of the Act, unless a Section 218 Agreement covers certain agricultural services.