In 1986, Medicare coverage was extended to all public and local officials who were recruited or rehired on or after April 1, 1986, unless their state had already entered into a Section 218 agreement, which insinuates it to both Social Security and Medicare coverage. A Section 218 agreement is a voluntary agreement between the state and the Social Security Administration (SSA) to provide Medicare (HI) or Medicare HI-only social and hospital insurance to government and local employees. These agreements are called “Section 218”, as they are permitted by Section 218 of the Social Security Act. Here is the “Gotcha”: If a local government employee who does not have an agreement under Section 218 participates in a replacement plan, that employee cannot also participate in Social Security. This may be a really important issue, because in California just there are dozens, if not hundreds, of local governments and instruments that do not have a Section 218 agreement, but participate in Social Security on a “voluntary” basis. Of course, they can do this as long as they do not provide replacement benefits to any of their FICA-insured employees. The problem is that most of them offer “unknowingly” benefits type of replacement plan. If this happens, it can happen on an employee basis for employees and on a payroll-by-payroll basis. As a result, the workers concerned may not also charge employers` or workers` social security contributions on their behalf. In addition, these billing periods cannot be set off against the final social security benefits of the staff. This suddenly became so important because California`s Social Security Administrator recently began asking all governments and locals if they have a Section 218 agreement, if they participate in Social Security, and if they present a replacement plan. We think they might be shocked to know how many public institutions have been overtaken by their own “generosity.” Stay on the spot.
There are thousands of local agencies (cities, counties, special districts, school districts, JPAs) in California. Of these, only 500 are parties to the state`s agreement with the SSA, in accordance with section 218. This means that there are thousands who do not have an agreement under Section 218. Because some states did not have their own pension systems, Congress amended the 1950 law to establish a one-state mechanism to choose social security for state employees. Pursuant to Section 218 of the Act and known as “Section 218 Agreements,” a state may voluntarily enter into an agreement in which the federal government agrees to cover state employees under social security coverage, and the state and its employees are subject to FICA taxes. Once concluded, an agreement covering a class or group of employees cannot be terminated or amended to exclude that group of employees in the future. . . .