08 Oct

Social Security Section 218 Agreement

A section 218 agreement may be concluded retroactively for up to five years of insurance from the date of approval of the agreement by the Confederation. It takes about six months to get approval from the Confederation. For example, if a retroactivity request is filed in 2017 and approved in 2018, the coverage could be applied retroactively to the 2013 coverage year. If the services provided by the employee are covered by a federal-Länder agreement, the coverage is simple – the staff must be insured for the FICA. Before 2 July 1991, the only way for a local government (city, village, county, etc.) to cover its employees under social security was for the State to include them in the federal-Länder agreement (section 218 of the agreement) with the Social Security Administration (SSA). The agreement extended social security coverage to state employers at the request of the state. 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. Under the Social Security Act, certain services for workers must be excluded from social security by virtue of an agreement provided for in Article 218. At the request of the State (or a local body), certain services and posts may be excluded from social security by virtue of the State agreement referred to in Section 218. Majority Referendum – An electoral process in which members of a pension group vote for or against participation in social security. . . .

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