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Social Security Section 218 Coverage

Social Security and Medicare coverage for State and local government employees is unique because public employees are covered for Social Security and Medicare through a Section 218 Agreement between the State and the Social Security Administration or under the mandatory provisions of Federal law.

When the Social Security Act was enacted in 1935, public employees were not eligible for Social Security coverage. This was due to a Constitutional question regarding the Federal government's power to tax state and local governments. Consequently, many government employees were without a retirement plan.

Beginning in 1951, Section 218 of the Act authorized states to voluntarily enter into an Agreement with the Social Security Administration to provide Social Security coverage for State and local public employees who were not covered under a retirement plan. In 1955, the Federal law, as amended, permitted coverage for members of a retirement system by referendum procedures. Tennessee is one of the states permitted by law to divide a retirement system on the basis of an employee's desire for coverage.

Prior to July 2, 1991, Social Security coverage for State and local government employees was voluntary and only accomplished by a Section 218 Agreement between the State of Tennessee and the Social Security Administration. This is still true for State and local government employees who are members of a public retirement system that meets the minimum benefit requirements established by the Internal Revenue Service.

A Section 218 Agreement is a written agreement that provides Social Security and Medicare coverage to some or all employees of a political subdivision or an instrumentality of the State unless the services are mandatorily or optionally excluded. Section 218 Agreements cannot be terminated.

The following are general rules for Social Security and Medicare coverage for State and local government employees:

1. Beginning April 1, 1986, State and local government employees hired (or elected) after March 31, 1986 are mandatorily covered for Medicare. However, voluntary agreements to provide Medicare coverage for employees hired prior to that date is available.

2. Beginning July 2, 1991, State and local government employees, who are not covered by a public retirement system or a Section 218 Agreement, are mandatorily covered for Social Security and Medicare.

3. Since 1951, State and local governmental entities may be covered for Social Security and Medicare under a Section 218 Agreement. Section 218 Agreements are voluntary agreements between the State and the Social Security Administration to provide Social Security and Medicare coverage. Such agreements are authorized under Section 218 of the Social Security Act and cannot be terminated.

Public employees who are members of a public retirement system that is not covered under a Section 218 Agreement can only obtain Social Security coverage through a Section 218 Agreement.