What is a Section 218 Agreement?

A Section 218 Agreement refers to a voluntary agreement that allows states and local governments to establish Social Security coverage for their employees. This agreement is essential because, under federal law, most state and local government employees are not automatically covered by Social Security. As a result, if a state or local government wants its employees to have Social Security benefits, they need to enter into this agreement with the Social Security Administration.

This arrangement often helps local governments enhance their employee benefits, ensuring that workers can rely on Social Security as a source of income during retirement, disability, or survivor benefits. It also allows state and local governments to provide equitable benefits for their employees relative to private sector employees, who typically participate in Social Security.

Understanding Section 218 Agreements is vital for administrators and HR professionals in public sector organizations, as they navigate retirement and benefits planning for their workforce. This knowledge aids in ensuring compliance with federal regulations and providing adequate support to employees regarding their retirement options.