Old Age & Survivors Insurance

Old Age & Survivors Insurance For Public Employees

Department of Retirement Systems Melanie Piccin OASI Program (360) 664-7316 0asi@drs.wa.gov

OASI – What is it? Social Security & Medicare • Section 210 the Social Security Act • Section 218 of the Social Security Act

OASI – The Beginning • 1935 – President Roosevelt (FDR) signed the Social Security Act • 1937 – first payroll taxes were collected and first benefits paid out • State & local government employees were not covered

OASI – FICA Taxes 1939 - taxing provisions were taken out of the Social Security Act and placed in the Internal Revenue Code (IRC) instead. The new section of the IRC was named the Federal Insurance Contributions Act (FICA).

OASI – Brief History from the 50’s • 1951 - Section 218 of the Social Security Act authorized states to enter into agreements with the federal government to voluntarily elect Social Security coverage for public employees who were not already covered under a retirement plan

OASI – Brief History from the 50’s • 1955 – retirement system members could also be covered, except police officers and fire fighters • 1959 – police officers and fire fighters in a retirement system could be covered

OASI – Section 218 Agreements • The original 218 Agreement for each state is between the state and the federal government • Each state administers their 218 Agreement by entering into separate agreements with state & local governments

OASI – Section 218 Agreements • After an agreement is entered into between the state and a governmental entity, the State Social Security Administrator submits a Modification to the 218 Agreement to the Social Security Administration (SSA) for approval • No voluntary coverage until the SSA approves the Modification

OASI – Section 218 Agreements • Each state has a person or agency assigned to be the State Social Security Administrator (SSSA) • Employment Security Department was the SSSA from 1951 to June 2009 • DRS became the SSSA effective July 1, 2009

OASI – Section 218 Agreements • All 50 states, Puerto Rico, the Virgin Islands, and approximately 60 interstate instrumentalities have Section 218 Agreements with SSA • Estimated that one fourth of public employees do not have Social Security coverage

OASI – WA’s 218 Agreement • Highlights of WA Coverage • 1951 – non-retirement system members at all state agencies covered • 1956 – TRS members covered at all state agencies, school districts and institutions of higher education • 1957 – PERS members covered at all state agencies and institutions of higher education (not school districts)

OASI – Mandatory Coverage • April 1, 1986 – mandatory Medicare coverage for most • July 2, 1991 – mandatory Social Security coverage extended to most state & local government employees, unless they are members of a retirement system

OASI – Voluntary Coverage Two types of voluntary coverage: • Absolute (non-retirement system group). Since 1991, most non-retirement system members are covered under the mandatory coverage provisions of the Social Security Act. • Retirement System Group

OASI – Voluntary Coverage Absolute coverage is obtained via resolution passed by governing board. Employees don’t have a say in this coverage. Q: Considering the mandatory coverage rules in place since 1991; why would an agency even bother to obtain absolute coverage now? A: To ensure that if they should later join a retirement system, employees would still be covered for Social Security without having to hold a majority vote referendum.

OASI – Voluntary Coverage If positions covered by a Retirement System are not already covered under a Section 218 Agreement, then coverage is obtained via a majority vote referendum. • Referendum must be authorized by employer

OASI – Role of SSSA/DRS • Administer the provisions of Social Security and Medicare as it pertains to state and local government employees • Physical custody of the Section 218 Agreement and Modifications • Advise new entities regarding OASI coverage. Many payroll officers unaware of special provisions for coverage of government employees

OASI – Role of SSSA/DRS • Monitor coverage at existing entities • Respond to inquiries from employers regarding coverage • Take appropriate steps to execute modifications to the original agreement • Provide SSA with notice and evidence of the legal dissolution of covered entities

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Old Age & Survivors Insurance