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Section 218 and Retirement Systems Basics (a 4-part video series)
How Section 218 Agreements Affect State and Local Government Employers
How Social Security and Medicare laws affect government entities
What’s a Qualified Retirement Plan for social security purposes?
Section 218 and Retirement System Interaction
Transcript PDF

Welcome to this IRS video on How Section 218 Agreements Affect State and Local Government Employers.

This is the first of a four-video series that help government entity employers correct or prevent payroll errors related to their unique participation in Social Security and/or Medicare coverage. The information in this presentation isn’t official guidance.

What is a Section 218 agreement? This refers to a voluntary agreement between the state and the Social Security Administration (SSA) to provide Social Security and Medicare Hospital Insurance (HI) or Medicare HI-only coverage for state and local government employees.

While the federal Section 218 laws are consistent, each state has different coverage under those laws. Contact your state’s Section 218 Administrator to understand your state’s specific coverage.

All states and Puerto Rico, the Virgin Islands, and 60 interstate instrumentalities have a Section 218 Agreement that extends Social Security and Medicare coverage to state and local government employees.

Each state has an administrator who works with SSA and the IRS to address the coverage and employment tax issues affecting employees. Depending on the state, administrators report dealing with as many as 5,000 employers per year.

Since 1951, Social Security coverage has been available to state and local government employees through a unique federal-state agreement authorized by Section 218 of the Social Security Act.

These agreements (known as Section 218) represent a mutual commitment that ensures the Social Security program is a viable part of employee benefit programs available to government employees.

Unlike workers in the private sector, all state and local employees aren’t covered by Social Security.

Some are covered by: Their public retirement pension program; both public pensions and Social Security; and by Social Security only.

When it began, the Social Security program didn’t include state and local government employees.

But the law changed. Most employees have Social Security protection because their states and the SSA entered into special agreements known as Section 218 agreements.

Others are covered by a federal law passed in July 1991 when Social Security was extended to state and local employees who weren’t covered by an agreement nor members of their agency’s public pension system.

This 1991 provision guaranteed a government employee would have Social Security benefits even if they didn’t have a retirement plan.

Effective for employees hired after March 31, 1986, Mandatory Medicare would be provided if there had been no Section 218 in place at that time. This guaranteed employees would have Medicare benefits if not covered by a post-retirement health plan.

Our series on 218 and government entities continues with video 2: How Social Security and Medicare Laws Affect Government Entities Thanks for watching!