Social Security & Medicare

Interested in learning more about Section 218 coverage, or need assistance understanding the complex Federal Insurance Contribution Act (FICA) tax laws? The SSSA team provides a variety of events and resources to assist you.

Webinars

In classes designed for employers, learn more about the Social Security and Medicare program. Payroll officers and human resources professionals are encouraged to register.

Topics include:

• Social Security & Medicare program overview
• Federal Insurance Contributions Act (FICA) tax compliance
• Windfall Elimination Provision (WEP)
• Government Pension Offset (GPO)
• How to contract for Section 218 Agreements

Register for a Social Security & Medicare Webinars online or e-mail SSSA@calpers.ca.gov.

*Information is collected in accordance with our Privacy Notice.

Newsletter

Updates regarding legislation, training, and policies impacting employers are covered in our newsletter. Subscribe to the State Social Security Administrator Program Newsletter and view archived newsletters for recent topics covered.

CalPERS Benefits Education Events (Members)

Are you a member looking to learn more about how Social Security benefits are affected by the CalPERS pension? Register to attend CalPERS Benefits Educational Events (CBEEs) to plan for your retirement future in a city near you.

Federal, State, and Local Government (FSLG) Self-Assessment

FSLG Compliance Self-Assessment (PDF) was created by the IRS, in coordination with SSA and the NCSSSA, to allow employers to review major areas of federal tax law and identify areas where compliance issues may exist. This anonymous voluntary self-assessment can help determine the level of compliance with federal tax requirements as it relates to federal income, Social Security and Medicare taxes and, public retirement system obligations

Note: The self-assessment tool is intended as a general guide to the most common tax issues that public employers may encounter, and to direct those entities to additional information as necessary. It is not intended to provide legal advice. It does not cover every question that may be encountered. The tool is provided for general information only and should not be relied upon as legal advice or a determination by the IRS with respect to a particular tax situation. The sources cited should be reviewed for complete information.

Section 218 Coverage

Public Employers have the option to contract for Social Security and/or 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 withhold Social Security and Medicare based on mandatory FICA requirements outlined by the IRS in the Federal-State Reference Guide – IRS Publication 963 (PDF).

How to Contract for Benefits

The Section 218 Agreement contract process is a six-step process, facilitated by the SSSA. This process can take 18-24 months to complete.

Step 1

Resolution Information Packet

Step 2

Procedure Plan

Step 3

Election

Step 4

Application & Agreement Documents

Step 5

SSA Review

Step 6

SSA Decision

Note: Employees, labor groups, unions, and other representatives may not initiate contracts for Section 218 coverage. Section 218 Agreements must be initiated by the employer.

To learn more about the Section 218 program and contracting process, visit Section 218 Agreements, or e-mail us at SSSA@calpers.ca.gov to request an information session.

Form SSA-1945

Is your agency not coordinated with Social Security and therefore not withholding FICA taxes? There are steps that must be taken to ensure your employees are informed.

In 2004 new legislation required state and local government employers to provide Social Security's form SSA-1945 (PDF) to new employees hired on or after January 1, 2005 in jobs not covered under Social Security. The form explains the potential effects of the two provisions in the Social Security law for workers who also receive a pension based on their work in a job not covered by Social Security:

1. Windfall Elimination Provision (WEP) - impacts the amount of an employee's Social Security retirement or disability benefit.
2. Government Pension Offset (GPO) - impacts Social Security benefits received as a spouse or an ex-spouse.

For this form, we recommend Employers ensure the following steps are taken:

• Provide the form to the employee prior to start of employment
• Obtain the employee's signature on the form
• Maintain original forms in employee files
• Submit a copy of the signed form to the agency's pension agency

For more information, visit the Social Security Administration State and Local Government Employers page.

The Windfall Elimination Provision (WEP)

In 1983, Congress passed the WEP to prevent employees who received non-covered (no Social Security taxes paid) pensions from the "windfall" of receiving the higher Social Security benefit calculation typically used for longtime, low-wage earners.

The WEP may reduce Social Security benefits for those who receive any portion of their pension not covered by Social Security, and who also qualify for benefits based on other Social Security-covered earnings.

Below is detailed information that may apply to CalPERS members:

• Not all CalPERS members are impacted by the WEP. Members should check their warrant or pay stub or review their earnings statement through their my Social Security Account to see if Social Security taxes have been withheld.
• Any reduction would be to a Social Security benefit, not a CalPERS pension.
• If a refund of CalPERS retirement contributions is taken in a lump sum, Social Security will still calculate the reduction as if a monthly government pension payment was received.
• The WEP may not apply if there are 30 or more years of substantial earnings in employment where Social Security taxes were paid.
  • If between 20-30 years of substantial earnings were covered by Social Security, the WEP may still apply, but at a lesser impact.

For more information about WEP and a list of exceptions, review the Windfall Elimination Provision (PDF) and use the WEP Calculator. Encourage employees to obtain a copy of their earnings record and utilize these tools to see how their Social Security benefit may be affected.

Government Pension Offset (GPO)

The GPO applies when a government pension based on employment not covered by Social Security is received and there is eligibility for a spouse or surviving spouse's Social Security benefit.

The GPO provisions do not apply if employment has always been covered by Social Security.

For more information about GPO, review Government Pension Offset (PDF) and use the GPO Calculator, using the spouse's earnings record, to determine possible impact.

Social Security & Your CalPERS Pension

Are you a CalPERS member? Find more information on how your Social Security benefits may be impacted by your CalPERS pension.

Social Security & Your CalSTRS Pension

Are you a CalSTRS member? Find more information on how your Social Security benefits may be impacted by your CalSTRS pension.

my Social Security Account

Sign up for a my Social Security account to access statements, review estimates of future Social Security retirement benefits, and more.

Note: The normal retirement calculators on the Social Security Administration website will not reflect WEP or GPO reductions.

Who to Contact

For more information about Social Security benefit offsets, contact the Social Security Administration. You can search for a local Social Security office online.

If there's a possibility Social Security benefits were reduced incorrectly by the WEP or GPO, first reach out to the Social Security field office. To escalate for further assistance contact the following:

• San Francisco Social Security Administration Public Affairs team
  • Call (800) 772-1213 or for TTY users, (800) 325-0778.
• California Official State Social Security Administrator (SSSA) office
  • Email SSSA@calpers.ca.gov
  • Or call (916) 795-0810.
• School members may also contact the California School Employees Association (CSEA)
  • Call (800) 632-2128.

Medicare (Hospital Insurance) coverage was extended to all those employees covered by a Section 218 Agreement on July 1, 1966. As of April 1, 1986, Medicare coverage became 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 the following requirements:

• The Public Employer did not have a valid Section 218 Agreement prior to July 1, 1966.
• 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 in to for purposes of avoiding the Medicare tax.
• The employment relationship with the employer has been continuous since March 31, 1986.

For employees hired prior to April 1, 1986, who are currently not paying into Medicare, a Section 218 Agreement to provide Medicare Hospital Insurance (HI) only coverage can be elected. If the employer wishes to initiate this type of Section 218 Agreement the employees once excluded from contributing, may begin to contribute.

Contact us by emailing SSSA@calpers.ca.gov for more information on how to initiate the process.

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.