Check System
Send us your comment!

Your comment will be read by our web staff, but will not be published.

Please do not enter any personal information. Your comment is voluntary and will remain anonymous, therefore we do not collect any information which would enable us to respond to any inquiries.

However, IRS.gov provides a How to Contact the IRS page where you will find guidance on where to submit specific questions.



Share this presentation
Copy and paste the following URL to share this presentation
To email a link to this presentation, click the following:
Bookmarks
This program writes a small 'cookie' locally on your computer when you set a bookmark.
If you want to utilize this feature, check the following checkbox. Otherwise, bookmarks will be disabled.
This is an IRS
audio presentation.

To view this page, ensure that Adobe Flash Player
version 10 or greater is installed.

Get Adobe Flash player

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: How Social Security and Medicare Laws Affect Government Entities.

This is the second video in our four-part series, that help government entity employers correct or prevent payroll errors related to Social Security and/or Medicare coverage. The information presented isn’t official guidance.

Now, let’s begin. While the Federal Section 218 laws are consistent, each state has different coverage under those laws. To understand your state’s coverage, contact your State’s Section 218 administrator.

We’ll be looking at a government position not an individual when it comes to Social Security and/or Medicare coverage therefore, it is possible a person could go from one position in a government entity to another position in another government entity and the Social Security coverage could be different. One position could be a participating position for Social Security while the other position might not participate in Social Security.

There are three ways a government employer/employee participate in Social Security and Medicare.

Full Social Security and Medicare are extended through a voluntary plan/agreement through your state Social Security administrator.

These agreements are commonly referred to as Section 218 agreements.

A position that is filled after July 1, 1991 and not covered by a Section 218 Agreement nor by a Qualified Retirement Plan is automatically covered for Social Security and Medicare. This second type of coverage is commonly referred to as mandatory FICA.

We’ll cover qualified employer’s retirement systems in video 3.

Medicare-only coverage is required for political subdivision employees hired after March 31st, 1986 whose services aren't covered for Social Security under a Section 218 agreement or under mandatory FICA.

Listen to these real-life examples of how coverage for Social Security, Medicare and retirement plans vary from state to state.

Kentucky teachers participate in a FICA replacement plan. We’ll be discussing FICA replacement plans in videos 3 and 4.

Kentucky decided to exempt the Teacher’s Retirement System positions from Social Security, which allows teachers to participate in retirement plans and teachers hired after March 31, 1986, participate in Medicare.

Indiana teachers participate in Social Security, Medicare and a retirement system because the Section 218 Agreement covers these positions.

Earlier we said if a person moves from one government entity to another the participation in Social Security may be different.

If an Indiana teacher moves to Kentucky, that teacher will be covered under Kentucky Teacher Coverage, not Social Security.

If the Kentucky teacher moves to Indiana, he or she would participate in Social Security under the Indiana Section 218 Agreement.

Participants in an Ohio Retirement System position aren’t covered by Social Security. Employees hired after 03/31/86 have Medicare.

A small city employee with no government retirement system would be covered for Social Security and Medicare under the mandatory laws of 1991. Again, each state has its own coverage types. Please check with your state for specific coverage details.

Our series on 218 and government entities continues with video 3: What’s a Qualified Retirement Plan for Social Security Purposes? Thanks for watching!