Frequently Asked Questions

What is a Section 218 Agreement?
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.

When the Social Security Act (Act) was enacted in 1935, State and local government employees were excluded from Social Security coverage because there was a legal question regarding the Federal government’s authority to tax State and local governments.

Because many governmental employees did not have their own retirement system, the 1950 Social Security Amendments added Section 218 to the Act to make Social Security coverage for State and local government employees possible.

Beginning in 1951, States were allowed to enter into voluntary agreements with the Federal government to provide Social Security coverage to State and local government employees who were not covered by a retirement system. These voluntary agreements are called Section 218 Agreements because they are authorized by Section 218 of the Act.

The Social Security Amendments of 1954 expanded the Act to allow States to extend Social Security coverage to State and local government employees who were members of public retirement system (except police officers and firefighters) provided coverage was authorized by the State and approved through a voluntary referendum of all retirement system members.

In 1956, the Act was amended authorized certain States to extend Social Security coverage to police officers and firefighters covered by a retirement system.

All 50 States, Puerto Rico, the Virgin Islands, and approximately 60 interstate instrumentalities have a Section 218 Agreement with SSA. Because of the voluntary nature of Section 218 Agreements, the extent of Social Security coverage varies from State to State.

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How do you know if you have an agreement and how do you get a copy?
Contact your State Administrator. The State Administrator can tell you if you have a 218 agreement, explain your coverage and provide you with a copy upon request.

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Why do you need to know if you have an agreement?
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. Coverage reporting errors could result in employees not receiving benefits they would otherwise be entitled. Errors could also result in employers paying back taxes and penalties.

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If a public entity has a Section 218 Agreement, are all employees covered for Social Security and/or Medicare under the agreement?
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. It is important to check with the State Social Security Administrator to determine who is covered under the State's agreement.

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Can a public employee voluntarily pay Social Security and/or Medicare taxes wtihout an Agreement?
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 (see mandatory Social Security). 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.

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Can a Section 218 Agreement be terminated?
No. Beginning April 20, 1983, Section 218 Agreements are permanent and cannot be terminated.

If an entity terminated its Agreement prior to April 20, 1983, coverage under a Section 218 Agreement may be obtained. Contact your State Administrator.

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Who is subject to mandatory Social Security coverage?
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 mandatorily covered under Social Security unless specifically excluded under Section 210 (p) of the Social Security Act (Link opens in new window). Public employees covered for Social Security are automatically covered for Medicare.

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) (link opens new window). You may also download this publication from the IRS Internet website.

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Who is subject to mandatory Medicare?
State and local government employees hired after March 31, 1986, is 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.

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) (Link opens in new window). You may also download this publication from the IRS Internet website.

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If you retire and later returns to work, are you covered for Social Security and/or Medicare?
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.

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How can you get an agreement?
Oklahoma allows state and local governments the option of calling for a referendum for full Social Security or allows a Medicare only referendum for employees who were hired before April 1, 1986. Public employees hired after March 31, 1986 already pay Medicare tax under mandatory laws and a referendum would not affect those employees’ current retirement system or Medicare coverage.

Oklahoma is a majority State. If a majority of at least 51 percent of the eligible employees vote in favor of paying full Social Security or Medicare only, all eligible employees will pay the tax. If 51 percent of the eligible employees voted against paying Social Security and/or Medicare, no eligible employee would pay the tax.
See Referendum Procedures to begin the process or contact your State Social Security Administrator

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