If you are a public employee, you might have heard about Section 218 agreements. It is a crucial aspect of Social Security and Medicare coverage that applies to public employees in certain states and local jurisdictions. In this article, we will explain what a Section 218 agreement is, why it matters, and how it works.
What is a Section 218 agreement?
In simple terms, a Section 218 agreement is a contract between a state or local government and the federal government. It outlines the terms and conditions under which state and local government employees participate in the Social Security and Medicare programs. The agreement defines which workers are covered and which are exempt from these programs. The Section 218 agreement is named after the section of the Social Security Act that authorizes the agreement.
Why is a Section 218 agreement important?
Before 1951, state and local government employees were exempt from Social Security and Medicare coverage. This meant that these workers would not receive benefits under these programs. In 1951, Congress passed a law that allowed states and local jurisdictions to enter into agreements with the Social Security Administration (SSA) to provide Social Security and Medicare coverage for their employees. Section 218 agreements are important because they ensure that public employees are covered by the same Social Security and Medicare programs as private sector employees.
How does a Section 218 agreement work?
When a state or local government decides to enter into a Section 218 agreement, the agreement must be approved by both the state legislature and the federal government. Once approved, the agreement outlines which employees will be covered by Social Security and Medicare and which employees will be exempt. The state or local government must deduct Social Security and Medicare taxes from the covered employees` paychecks and remit those taxes to the federal government, along with the employer`s share of the taxes.
In conclusion, Section 218 agreements are legal agreements between state and local governments and the federal government that ensure public employees are covered by Social Security and Medicare. These agreements are crucial for public employees to receive the same benefits as private sector employees. Understanding the terms of the Section 218 agreement is important for employees and employers to ensure that they are complying with the law and maximizing their benefits under the program.