Frequently Asked Questions
A Section 218 Agreement is a written voluntary agreement between a State and the Social Security Administration to provide Social Security and Medicare Hospital Insurance (HI) or Medicare coverage only for employees of State and local governments. This agreement is authorized under Section 218 of the Social Security Act. Employees covered under a Section 218 Agreement have the same coverage and benefit rights as employees in the private sector. All States have a Section 218 Agreement, but the extent of coverage varies.
The term State includes the 50 States, Puerto Rico, the Virgin Islands, and interstate instrumentalities. It does not include the District of Columbia, Guam, American Samoa, or the Commonwealth of the Northern Mariana Islands.
An interstate instrumentality is an independent legal entity organized by two or more States to carry out one or more governmental functions, i.e., police power, taxing power and/or power of eminent domain. For purposes of a Section 218 Agreement, an interstate instrumentality has the status of a State.
When a State enters into a Section 218 Agreement with the SSA, employees of the State and its political subdivisions are brought under the agreement in groups known as "coverage groups." There are two types of coverage groups: non-retirement system and retirement system coverage groups. An example of a non-retirement system coverage group would be employees of City A who are not members of a public retirement system. An example of a retirement system coverage group would be teachers in City A who are members of the Teachers Retirement System.
Each State designates an official State Social Security Administrator (SSSA) to act for the State in administering the State's Section 218 Agreement. The State Administrator provides information and answers questions about Social Security and Medicare coverage under the State's agreement. A list of the State Administrators can be obtained from the Internet web site of the National Conference of State Social Security Administrators. See the Roster of State Social Security Administrators [Disclaimer].
If the entity has a Section 218 Agreement, the entity should be paying Social Security and Medicare taxes (or Medicare only) and reporting some or all of their employees for Social Security and Medicare.
Not necessarily. The State determines which groups of employees are covered and when coverage begins. There are certain groups of employees who cannot be covered under an agreement without a vote. Coverage under Section 218 Agreements differs from State to State. Therefore, it is important to check with the State Social Security Administrator to determine who is covered under the State's agreement.
No. Beginning April 20, 1983, Section 218 Agreements are permanent and cannot be terminated.
Since July 2, 1991, most State and local government employees, who are not covered under a qualifying public retirement system or a Section 218 Agreement, must be covered under Social Security.
State and local government employees hired after March 31, 1986, are mandatorily covered for Medicare Hospital Insurance (HI) unless specifically excluded under Section 210(p) of the Social Security Act. Public employees covered for Social Security under a Section 218 Agreement are automatically covered for Medicare.
Employees hired by a State or local government before April 1, 1986, are exempt from mandatory Medicare HI coverage if they have been in continuous employment with the same State or local government employer since March 31, 1986, and are members of a public retirement system coverage group not covered for Social Security or Medicare. Employers may, however, voluntarily extend Medicare HI-only coverage to such employees under a Section 218 Agreement. If a State or local government employer wants to provide Medicare HI-only coverage for employees hired before April 1, 1986, the employer should contact their State Social Security Administrator [Disclaimer].
No. The employing public entity must have a Section 218 Agreement that covers the employee's services or the services must be covered under the mandatory coverage rules. It is not possible to pay Social Security taxes voluntarily on work that is not covered for Social Security under the terms of the Social Security Act and the Internal Revenue Code.
A retiree of a public retirement system is exempt from Social Security coverage if he or she is employed by the same employer or another employer who maintains the same retirement system that the retiree formerly participated in. However, if the retiree is hired into a position that is covered under a Section 218 Agreement, the retiree's services are covered for Social Security. All employees hired after March 31, 1986, are mandatorily covered for Medicare unless specifically excluded under Section 210(p) of the Social Security Act.
The Internal Revenue Service (IRS) is responsible under the Internal Revenue Code for administering the mandatory Social Security and Medicare provisions under the Federal Insurance Contributions Act. For further information, contact the IRS at 1-800-829-3676 and request Publication 963 (Federal-State Reference Guide). You may also download this publication< from the IRS Internet web site.
To find the Regional Office State and Local Coverage Specialist for your State, check our list of Regional Office State and Local Coverage Specialists.