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Employers

Federal Social Security and Medicare

The Department of Employee Trust Funds (ETF) administers the Wisconsin Retirement System (WRS), as well as numerous benefit programs. ETF also provides information to employers about Social Security and Medicare coverage for public employees based on ETF's role as the designated liaison between the Social Security Administration and Wisconsin employers that provide Social Security coverage. Please see below for more information on these responsibilities.

Social Security

How do public employers provide social security coverage?

  • Mandatory Social Security Coverage: Effective July 2, 1991, the Omnibus Budget Reconciliation Act (OBRA) required Social Security coverage for state and local government employees who are not members of a public retirement system.
  • Section 218 Agreement: State and local government employers can choose to cover their employees through an agreement under Section 218 of the Social Security Act.

What is a Section 218 Agreement?

    When the Social Security Act was created in 1935, it did not cover public employees because there was a constitutional question regarding the power of the federal government to tax state and local governments.

    In 1950, the Social Security Act was amended by Section 218, which allowed states to voluntarily enter into agreements with the Social Security Administration to permit governmental employers to provide Social Security coverage for some or all of their employees.

    Local employers may choose to come under the Section 218 Agreement through modifications to that agreement. Many local Wisconsin employers have done so.

Does Wisconsin have a Section 218 Agreement?

Yes. The State of Wisconsin entered into a Section 218 Agreement with the federal government in 1951.

What role does ETF play in Social Security coverage?

ETF houses the federally-mandated role of State Social Security Administrator. The State Social Security Administrator is responsible for maintaining documents related to the State of Wisconsin’s Section 218 Agreement with the federal government. In addition, the State Social Security Administrator provides information to employers and employees about Social Security coverage for public employees.

Please note: The State Social Security Administrator does not have access to specific individual information, such as information about an employee’s total work history, Social Security work credits or any potential spousal or survivor benefits. To obtain more information about your potential Social Security benefits and potential offsets for government employees, please contact the Social Security Administration (SSA) directly at 1-800-772-1213 or via the SSA’s e-mail. You may visit the SSA website at www.ssa.gov for more information.

Are all local governmental employees covered under the Section 218 Agreement?

    No. Local governmental employers may choose whether to come under the Section 218 Agreement.

    Employers may also choose whether to limit Social Security coverage to those employees who are covered by a retirement system, or whether to provide coverage to all of their employees not excluded by law. An employer decision to cover employees under the Section 218 Agreement is irrevocable.

    Please note: Wisconsin state law requires WRS employers to cover their WRS-eligible employees for Social Security, with the exception of certain firefighters. State law also requires that all state employees and teachers be covered under the Section 218 Agreement.

    For more information, please contact ETF’s Employer Communications Center at 608-266-3285 or toll free at 1-877-533-5020.

Can positions that are not covered under the Section 218 Agreement still have Social Security coverage?

Positions that are not covered under the Section 218 Agreement may still have Social Security coverage under the mandatory Social Security coverage provisions of the Federal 1990 Omnibus Budget Reconciliation Act (OBRA).

OBRA (1990) requires Social Security coverage for employees meeting each of the following three conditions:

    The employee is:
    • not covered under a Section 218 Agreement,
    • not covered by an Internal Revenue Code Federal Insurance Contributions Act (FICA) replacement plan, and
    • not excluded under the Section 218 Agreement or the Social Security Act.

According to the SSA, these mandatory Social Security provisions were intended to ensure that all public employees had some type of retirement protection, either from Social Security or through a plan offered by the employer.

What are an employer’s responsibilities regarding employees who are not covered by Social Security?

An employer must provide Form SSA-1945 to anyone taking a job that is not covered for Social Security. That form, which must be signed by the employee, explains how not being subject to Social Security may affect future benefits. For WRS purposes, this form would apply to most firefighters.

Are there potential offsets to Social Security benefits?

Social Security benefits may be reduced in one of two ways—via the Government Pension Offset (GPO) or the Windfall Elimination Provision (WEP).

  • Government Pension Offset
    The GPO may apply to the spousal or survivor benefit of an individual who receives a pension for work not covered by Social Security. For more information on the GPO and exceptions to the GPO, please see the SSA’s Government Pension Offset (GPO) fact sheet or contact the SSA for more information.
  • Windfall Elimination Provision
    The WEP may apply to an individual whose employer does not withhold Social Security taxes from his or her salary. For more information on the WEP and exceptions to the WEP, please see the SSA’s Windfall Elimination Provision (WEP) fact sheet or contact the SSA for more information.

Medicare

Do employees under the Section 218 Agreement have Medicare coverage?

Yes. The Medicare Program was established by the Social Security Act of 1965. Beginning July 1, 1966, employees covered under a Section 218 Agreement are automatically covered for Medicare.

Do most employees who are not covered under the Section 218 Agreement have Medicare coverage?

Yes. Prior to April 1, 1986, state and local government employees could only be covered for Medicare under a Section 218 Agreement. This changed with the enactment of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, which mandated that all state and local employees hired or rehired after March 31, 1986, must be covered for Medicare. Employees excluded from mandatory Medicare coverage include those who have been in continuous employment with their employer since March 31, 1986.


Additional Resources:

Social Security Employer Bulletins
Federal-State Reference Guide (IRS Publication 963)

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