Understanding State Social Security Fees
Since 1955, we've been designated as the State Social Security Administrator (SSSA) for California. As the SSSA, we're primarily responsible for administering Section 218 Agreements between the federal Social Security Administration and state and local government employers that have chosen to provide Social Security benefits to their employees. The agreements detail benefits and coverage amount authorized by Section 218 of the Social Security Act.
We also process agreement modifications, provides education to employers about Social Security and Medicare coverage, and collects and reports employer and coverage information to the Social Security Administration through annual information requests (AIR).
Although the SSSA program resides within CalPERS, it's not part of core pension and health benefit programs.
Changes
Prior to 2019, funds to pay for SSSA-related administrative expenses came from interest earned on past Social Security tax payroll withholdings. Those funds are now exhausted.
Because we're legally prohibited from using pension and health funds to cover the SSSA's administrative expenses, we're now collecting a fee from those public agencies that have Section 218 Agreements.
From 1955 to 1986, CalPERS collected Social Security tax withholdings from public agencies and then remitted the withholdings to the Social Security Administration. Those funds earned interest while on deposit, and the interest earnings were utilized to pay for SSSA-related administrative expenses. Although the IRS took over the collection activities in 1987, residual interest earnings continued to fund administrative expenses through 2018.
In 2019, the resources will be depleted.
The federal Social Security Administration doesn't reimburse CalPERS for its SSSA expenses, and we can't legally use pension or health care funds for this purpose. Therefore, an annual fee must now be collected from the public agencies directly.
Fees
The fees are based on the number of employees working at each public employer. The delineations between the categories are based on employer sizes used by the U.S. Department of Labor.
The amount of the fee is based on the cost of administering the program. The fees collected are designed to maintain one year of reserves for the program, on a rolling annual basis.
The fee is mandatory and late fees and interest will be assessed after 30 days. Unpaid accounts will go through collections.
There are two types of fees that may be assessed:
- A $650 fee to establish a new or amend an existing Section 218 agreement
- An annual maintenance fee based on the number of employees as follows:
| Number of Employees | Fee |
|---|---|
| 1-4 | $200 |
| 5-9 | $250 |
| 10-19 | $300 |
| 20-49 | $400 |
| 50-99 | $500 |
| 100-249 | $1,000 |
| 250-499 | $1,500 |
| 500-999 | $2,000 |
| 1,000+ | $2,500 |
The fees collected will be held in a distinct account and utilized to fund the staff, resources, and administrative expenses incurred by us to administer the Social Security program.
This includes administering new Section 218 Agreements, processing Section 218 coverage modifications, providing education to employers about Social Security and Medicare coverage, and collecting and reporting employer and coverage information to the Social Security Administration.
The fees will not be used to cover any expenses related to pension or health care benefit programs.
We'll annually review the account balance and adjust the fee schedule as necessary to maintain no more than a one-year reserve of funds.
We'll assess the annual maintenance fees annually through the AIR process. Beginning in August 2019, we'll assess approximately 600 employers/month in alphabetical order.
Employers will have 30 days to pay the fee.
The implementation or modification fee for Section 218 agreements are due within 60 days of initiating the process. The invoice can be viewed and paid through your agency's myCalPERS account.
We'll assist those agencies that don't have pension or health care contracts to establish a myCalPERS account.
Contact the SSSA via email or call 916-795-0810 for assistance with account setup or usage.
Agencies Affected
Any state or local government public agency or school that has a voluntary Section 218 agreement must pay the fee. This includes state agencies, cities, counties, special districts, schools, colleges, and universities.
Key details:
- If your agency doesn't have a section 218 agreement in place, then your agency will not receive an invoice for the annual fee.
- If only some of your employees are coordinated with Social Security and have a Section 218 Agreement in place, your agency will still be assessed the fee, based on the full employee population.
- The SSSA program isn't part of core pension and health benefit programs and is unrelated to other contracts with us. The fee is applicable regardless of whether a public agency has a pre-existing contract with us for pension or health care benefits.
Contact Information
If you're unsure if your agency has entered into a voluntary agreement, email the SSSA or call 916-795-0810.
Mail: CalPERS - State Social Security Administrator Program
P.O. Box 720720
Sacramento CA, 94229-0720