Social Security & Medicare
The California Public Employees’ Retirement System (CalPERS) is the official Social Security Administrator for the State of California’s Section 218 Agreement (per California Government Code 22200).
The State Social Security Administrator (SSSA):
- Assists local governments in securing Section 218 coverage for their employees
- Supports local government in properly withholding and reporting Social Security and Medicare tax
- Acts as a liaison with the Social Security Administration and the Internal Revenue Service (IRS) to address coverage-related issues and questions
- Performs education and outreach
As an employer, the types of assistance you can receive from the SSSA include, but are not limited to:
- Assistance in determining whether mandatory Social Security and Medicare coverage is necessary, or if a Section 218 Agreement is applicable
- Guidance in resolving issues related to Section 218 Agreement coverage
- Processing modifications to California’s Section 218 Agreement to cover new agencies and/or correct erroneous reporting
- Requests for an employer Social Security training workshop
- Requests for an informational meeting to discuss Social Security and/or Medicare contracting options
- Requests for copies of the agency’s Section 218 Agreement
Subscribe to the State Social Security Administrator Program Newsletter, or register for a Social Security & Medicare Workshop to learn more.
Public employees may voluntarily be covered for Social Security and Medicare through a Section 218 Agreement. Contracting for Social Security and/or Medicare must be initiated by the employer. In California, contracting for coverage is done in conjunction with an already established public retirement system. Employers who do not have an established retirement system are required to report Social Security and Medicare based on mandatory FICA requirements outlined in the IRS Federal-State Reference Guide (Publication 963) (PDF).
Several provisions reduce the Social Security benefits of workers and their spouses who may have pensions from employment that wasn't covered by Social Security.
- Windfall Elimination Provision (WEP) - The WEP reduces the benefit of workers who have pensions from work that weren't covered by Social Security. It may apply in some cases where CalPERS members purchase additional service credit. The WEP removes an unintentional advantage for workers who have a pension from non-covered work and also qualify for Social Security benefits.
- Government Pension Offset (GPO) - The GPO reduces Social Security spousal and survivor benefits to workers who also receive a public pension from their own government job (whether federal, state, or local) that wasn't covered by Social Security. Your Social Security benefits will be reduced by two-thirds of your non-covered government pension.
If you choose to take your government pension annuity in a lump sum, Social Security will still calculate the reduction as if you had chosen to receive monthly payments for your government pension.
- Dual Entitlement - A person may be entitled to more than one benefit at the same time.
- Retirement Earnings Test - Recipients of Social Security benefits who are under the retirement age (FRA), and whose work income surpasses a threshold amount, will have their current benefits reduced by $1 for every $2 earned above the threshold.
Medicare (Hospital Insurance) coverage is mandatory for state and local government employees hired (or rehired) after March 31, 1986. However, services performed after this date are exempt from mandatory Medicare coverage (known as the Continued Employment Exception) if the employee is a member of a public retirement system and meets all of the following requirements:
- The employee was performing regular and substantial services for remuneration for the state or political subdivision employer before April 1, 1986.
- The employee was a bona fide employee of the employer on March 31, 1986.
- The employment relationship with the employer was not entered into for purposes of avoiding the Medicare tax.
- The employment relationship with the employer has been continuous since March 31, 1986.
- An employee hired before April 1, 1986, by a state employer and who transfers after March 31, 1986, to another state employer of the same state qualifies for the continuing employment exception, provided the transfer was made without a termination of the employee’s overall employment relationship with that state.
- The same rule applies to an employee hired before April 1, 1986, by a political subdivision employer who transfers after March 31, 1986, to another employer of the same political subdivision.
- An employee hired before April 1, 1986, doesn't qualify for the continuing employment exception if, after March 31, 1986, the employee transfers from a state employer to a political subdivision employer, or from a political subdivision employer to a state employer.
- An employee doesn't qualify for the exception if the employee transfers from a political subdivision employer in one political subdivision to a political subdivision employer in a different political subdivision.
For more information, refer to Section 13205 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), section 3121(u) of the Internal Revenue Code (Application of Hospital Insurance Tax to Federal, State, and Local Employment), or the official government Medicare website.
State Social Security Administrator Program
CalPERS - State Social Security Administrator Program
P.O. Box 720720
Sacramento CA, 94229-0720
Phone: (916) 795-0810
- California Health Advocates
- Centers for Medicare & Medicaid Services
- Maximum Taxable Earnings Over Time
- Section 218 Agreements
- Social Security & Medicare Workshops
- Social Security Administration FAQs
- State Social Security Administrator Program Bulletins
Forms & Publications
Frequently Asked Questions
- Can employees who lost their Social Security benefits pay the contributions for coverage on their own?
There are no provisions that would allow employees to voluntarily make the contributions on their own.
- Do we withhold Social Security and/or Medicare from the wages of our retired annuitants under CalSTRS or CalPERS?
Under IRS regulations, rehired annuitants are exempt from Social Security coverage if the annuitant is employed by the same employer or if the annuitant is employed by a different employer who maintains the same retirement system. Since April 1, 1986, rehired annuitants are subject to Medicare tax withholding.
- How do I correct overpaid/underpaid contributions?
Contact the IRS. Start with the office/department you send your taxes and contributions to.