State and local government employees hired (or rehired) after March 31, 1986, are subject to mandatory Medicare coverage. Public employees covered for Social Security under a Section 218 Agreement are already covered for Medicare. Employees whose services are not covered for Social Security but who are required to pay the Medicare-only portion of FICA are referred to as Medicare Qualified Government Employees (MQGE).
Employees who have been in continuous employment with the employer since March 31, 1986, who are not covered under a Section 218 Agreement nor subject to the mandatory Social Security and Medicare provisions, remain exempt from both Social Security and Medicare taxes, provided they are members of a public retirement system.
Services performed after March 31, 1986, by an employee who was hired by a State or political subdivision employer before April 1, 1986, are exempt from mandatory Medicare coverage if the employee is a member of a public retirement system and meets all of the following requirements:
- 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 that employer on March 31, 1986;
- The employment relationship with that employer was not entered into for purposes of avoiding the Medicare tax;
- The employment relationship with that employer has been continuous since March 31, 1986.
The following are not subject to mandatory Medicare coverage even though the services are performed by an employee hired after March 31, 1986:
- Services performed by individuals hired to be relieved from unemployment.
- Services performed in a hospital, home or other institution by a patient or inmate thereof .
- Services performed by an employee on a temporary basis in case of fire, storm, snow, earthquake, flood or other similar emergency.
- Services performed by non-resident aliens with F-1, J-1, M-1 and Q-1 visas.
- Services in positions compensated solely by fees that are subject to Self-Employment Contributions Act (unless covered under Section 218 Agreement).
- Services performed by a student enrolled and regularly attending classes at the school, college or university where they are working (unless covered under Section 218 Agreement).
- Services performed by an election worker or official whose pay in a calendar year is less than the amount mandated by law (unless covered under Section 218 Agreement).
- Services that would be excluded if performed for a private employer because it is not work defined as employment under Section 210(a) of the Social Security Act (unless Section 218 Agreement covers certain agricultural services).
If a State or local government employer wants to provide Medicare coverage for employees who were hired before April 1, 1986 and are members of a public retirement system, the employer should contact their State Social Security Administrator. [Disclaimer]