Chapter 14: Addendum

Report compensation for each employee. Report days with System/Plan T1 or type code 80. Report hours for all other examples where indicated. See the chart below to determine the system, plan, type code, and if contributions are reported.

¹ ESD’s use type code 30.
² The TRS eligible or ineligible position must be a contracted position.
³ If you know the employee does not work for any other employer, substitute reporting is optional.
⁴ If combined hours meet eligibility criteria. Otherwise, report type code 79 on TRS report.
⁵ If combined hours meet eligibility criteria. Otherwise, report type code 39 on SERS report
⁶ ESD’s use type code 08.

How to Report on the Transmittal Report Effective with the 2004-2005 Fiscal/School Year: Report compensation for each employee. Report days with System/Plan T1 or type code 80. Report hours for all other examples where indicated. See the chart below to determine the system, plan, type code, and if contributions are reported.

¹ESD’s use type code 30.
²The TRS eligible or ineligible position must be a contracted position.
³If you know the employee does not work for any other employer, substitute reporting is optional
⁴If combined hours meet eligibility criteria. Otherwise, report type code 79 on TRS report.
⁵If combined hours meet eligibility criteria. Otherwise, report type code 39 on SERS report.
⁶ESD’s use type code 08.

How to Report on the Transmittal Report Effective with the 2004-2005 Fiscal/School Year: Report compensation for each employee. Report days with System/Plan T1 or type code 80. Report hours for all other examples where indicated. See the chart below to determine the system, plan, type code, and if contributions are reported.

¹ESD’s use type code 30.
²The TRS eligible or ineligible position must be a contracted position.
³If you know the employee does not work for any other employer, substitute reporting is optional.
⁴If combined hours meet eligibility criteria. Otherwise, report type code 79 on TRS report.
⁵If combined hours meet eligibility criteria. Otherwise, report type code 39 on SERS report.
⁶ESD’s use type code 08.

Here are the most common reporting problems that school district and ESD employers are encountering when reporting substitutes beginning with the 2004-2005 school year.

Wrong type code

There are new type codes for reporting substitutes. The most common problem that employers are encountering is using the wrong type code when reporting a substitute. DRS provides a chart for determining which type code to use when reporting a substitute who is not a retiree.

Reporting retirees as substitutes

The only type codes that you can use for reporting a retiree who returns to work are 97, 98, or 99. Do not use the substitute codes for reporting retirees. Refer to this chart for which type code to use when reporting a retiree working as a substitute.

Substitute to active member within the same month

How to report an employee who began employment as a substitute and then became an active member within the same month:

• If earnings were reported in error as a substitute, back out the compensation and hours/days using the substitute type code.
• Report an end date for the substitute service.
• Let the data process.
• Next, report the begin date for the active service time using active member type codes.
• Report all compensation, contributions, and hours/days for the active member for the entire month using active member type codes. You will need to determine if the compensation, contributions, hours/days can be reported via Employer Reporting Application or if you will need to report this information via your own payroll system.

Substitute to active member in a new month

How to report an employee who began employment as a substitute, then on the first of the following month became an active member:

• Report an end date for the substitute service.
• Let the data process.
• Next, report the begin date for the active service time using active member type codes.
• Report all compensation, contributions, and hours/days for the active member using active member type codes. You will need to determine if the compensation, contributions, hours/days can be reported via Employer Reporting Application, or if you will need to report this information via your own payroll system.

Substitute to active member, but no substitute end date transmitted

What to do if a begin date for the active service was transmitted, but an end date for the substitute service was never transmitted: While it is strongly recommended that employers transmit the end date for the substitute service, DRS now has an edit in place that will automatically insert an end date for the substitute service that is one day prior to the begin date transmitted for the active service. However, any compensation and hours/days reported in error as a substitute will need to be backed out and re-reported as an active member. This type of back out must be done manually at DRS. Contact ESS for assistance.

Active member to substitute within the same month

An employee working as an active member, for example in November, becomes a substitute mid-month:

• Report all compensation, contributions, and hours/days for the entire month of November with active member type codes.
• Report the end date for the active member as the last day of the month–in this case as November 30th.
• Let the data process.
• Report a begin date of December 1 for the substitute service. Because the employee was working as an active member through part of the month, all service is reported as active. Begin transmitting only compensation and hours/days for the substitute service beginning December 1 with the substitute type codes using the substitute chart.

The Judges Benefit Multiplier (JBM) Program creates a new option for justices and judges to increase the benefit multiplier used in their retirement benefit calculation.  Those who are members of PERS prior to 2007 may choose to participate. New justices and judges who choose to enter PERS membership on or after January 1, 2007 are mandated to participate.

Justices and judges with prior PERS service

Beginning January 1, 2007 through December 31, 2007 members of the Public Employees’ Retirement System (PERS) serving as justices or judges may make a one-time irrevocable election to join the JBM Program, and terminate JRA membership if applicable.

Justices and judges with no prior PERS service

Justices and judges who choose to enter PERS membership beginning January 1, 2007 are mandated into PERS Plan 2 and the JBM Program.

Justices and judges currently contributing to JRA

Judicial members who do not elect to join the JBM program can continue contributing to JRA. New judicial members cannot contribute to JRA.

JBM Contribution Rates

Refer members to the Judicial Benefit Multiplier member information for answers about eligibility and impacts to retirement benefits.

What forms do I need to enroll a judge or justice into the JBM program?

Select from the categories below:

New employee – prior participation in JBM

Retirement Status Form

Beneficiary Designation Form

Member Information Form (If the employee is a PERS Plan 3)

New employee – new member of PERS

Retirement Status Form

Beneficiary Designation Form

What are the reporting requirements for JBM?

To report JBM data correctly, you will need to update your payroll and business processes. Refer to the following reporting requirements:

Employer handbook updates

Although PERS JBM changes have been added throughout the Handbook, here are the major updates:

• Chapter 2 – Membership, PERS JBM Plan Rules (JBM is not a separate plan, so updates are included in the PERS Plan Rules)
• Chapter 2 – Membership Questions and Answers
• Chapter 2 – Membership Definitions (Added two new terms: Benefit Multiplier and Judges Benefit Multiplier Program)
• Chapter 6 – Contribution Rate Index (Added rates for PERS-JBM and TRS-JBM)
• Chapter 7 – PERS Non-JBM Type Codes, Type codes 10, 11, 59
• Chapter 7 – PERS JBM Type Codes, Type codes 26, 27, 28, 29, 54, 56
• Chapter 7 – TRS Plan 1 JBM Type Codes, Type code 70
• Chapter 7 – TRS Plan 1 Non-JBM Type Codes, Type code 78
• Chapter 8 – Special Reporting for Plan 3, PERS JBM

DRS email 06-023

Additional JBM Information & Update to Technical Reporting Requirements

DRS email 06-021

Technical Specifications for Judicial Benefit Multiplier Program

JBM legislation

For more information, refer to the Revised Code of Washington (RCW):

JRA: 2.14.115

TRS: 41.32.581, 41.32.584, 41.32.587

PERS: 41.40.124, 41.40.127, 41.40.404, 41.40.408, 41.40.760, 41.40.763, 41.40.767, 41.40.770, 41.40.870, 41.40.873, 41.40.877, 41.40.880

Actuarial funding of state retirement systems: 41.45.200, 41.45.203

Old Age and Survivors Insurance (OASI) program

Social Security and public employees

When the federal Social Security Act began in 1935, public employees were not eligible for Social Security benefits. This was due to a constitutional question regarding the federal government’s power to tax state and local governments. Consequently, many government employees were without a retirement plan.

In 1951, Section 218 of the Act authorized states to voluntarily elect Social Security coverage for public employees. These Federal-State Agreements, often referred to as Section 218 Agreements, were entered into with the Social Security Administration. The governor of each state assigns an agency to administer its Section 218 Agreement. DRS is the current State Social Security Administrator.

Today, most public employees who are members of a qualifying retirement system cannot participate in Social Security through their public employment unless their retirement system group is covered by a Section 218 Agreement. Contact your employer if you have questions about your Social Security coverage. Employers can contact DRS at drs.oasi@drs.wa.gov with questions about an agency’s Social Security coverage status.

DRS is the state Social Security administrator

Effective July 1, 2009, the Department of Retirement Systems (DRS) became the State Social Security Administrator of the Old Age and Survivors Insurance (OASI) Program. DRS is responsible for administering the voluntary provisions of Social Security and Medicare coverage for public employers in the state of Washington. Voluntary coverage is also known as Section 218 coverage (pursuant to Section 218 of the Social Security Act). DRS is the liaison between public employers, the Social Security Administration (SSA) and the Internal Revenue Service (IRS) for coverage-related issues and questions.

History of Washington’s Social Security and Medicare coverage for public employees

History of Washington’s Social Security and Medicare Coverage for Public Employees.

Each time coverage for a new group of employees is added to Washington’s Section 218 Agreement, a modification to the Agreement is submitted to the Social Security Administration for approval.

Social Security and Medicare for police officers and fire fighters

Social Security and Medicare for Police Officers and Fire Fighters

• Before 1959—if a police officer or fire fighter position was enrolled in a retirement system it was mandatorily excluded from social security coverage.
• January 1, 1959—social security coverage could be acquired for police officer or fire fighter positions covered by a retirement system through a majority vote referendum election process.
• April 1, 1986—most employees, including police officers and fire fighters, hired on or after this date are mandatorily covered for Medicare.
• March 1, 1970—Law Enforcement Officers’ and Fire Fighters’ (LEOFF) retirement system established. Many police officer and fire fighter positions were mandated into LEOFF.
• July 2, 1991—most state and local government employees became subject to mandatory social security and Medicare coverage, unless they were members of a qualified retirement system.
• Before LEOFF, a fire fighter was mandated into the Fireman’s Relief and Pension Fund if the entity had two or more paid fire fighter positions.
• If a police officer or fire fighter position was not enrolled in a retirement system at the time coverage was acquired for the regular employees of the organization, the coverage of the regular employees extended to police officer or fire fighter positions also (for example, if all non-retirement system positions obtained social security coverage, then so did the police officer or fire fighter positions).
• If a police officer or fire fighter position did not exist at the time coverage was acquired for the other employees, coverage for the police officer or fire fighter position depended upon the situation that existed at the time the position was created.
• If, at the time of creation, a police officer or fire fighter position was enrolled in a retirement system, coverage of other employees did not automatically extend to the police officer or fire fighter position. Coverage could only be acquired through a referendum election process.
• In each case, the exact circumstances that existed at the time the police officer or fire fighter position was created must be determined.
• Police officer or fire fighter positions are considered enrolled in a retirement system if enrollment had been actually required or if enrollment was mandated by law. If mandated, it does not matter that the organization might not have taken the necessary actions to enroll the police officer or fire fighter positions in the system, the police officer or fire fighter positions are considered in a retirement system.
• 2008—HB 2510 passed. Medicare-only coverage can be acquired via a divided vote referendum for employees who were hired before April 1, 1986 and have been in continuous employment through the date of the referendum.

Divided referendum for Medicare-only

The 2008 Washington State Legislature passed a law that allows local governments to request a divided referendum in which employees can vote to participate in Medicare. It only affects employees who:

• Do not currently pay Medicare taxes;
• Were hired before April 1, 1986; and
• Have been in continuous employment through the date of the referendum.

Annual invoice information

As the State Social Security Administrator, DRS is required by RCW 41.48.065 to bill participating employers for the cost of administering the program.

What is a participating employer?

A state or local government agency that is covered for voluntary Social Security under Washington’s Section 218 Agreement.

How is the annual invoice calculated?

The invoice amount is calculated using a formula based on several factors:

• The number of OASI-covered agencies (1,301 for 2025 invoice year)
• Each participating employer’s total Social Security wage amount for the prior tax year (TY 2024)
• The total budget amount of the OASI program ($168,000 for fiscal year 2025/2026)
• A minimum invoice amount of $25

Glossary of Section 218 terms

Absolute Coverage Group/Non Retirement System Coverage Group – A permanent grouping of employees. For example, all the employees of a city or town. It is a coverage group for coverage purposes; the term also refers to groups of employees whose positions are not under a retirement system. Such groups are also referred to as Section 218(b)(5) coverage groups.

Application/Agreement – The contract between the State of Washington and the political subdivision to provide Social Security coverage for state and political subdivision employees under Section 218 of the Social Security Act.

Coverage Groups – Groupings by which employees must be covered under an agreement (absolute coverage group or retirement system coverage group).

Divided-vote Referendum for Medicare-only – Employees hired before 4/1/1986 and continuously employed by the same employer may vote to participate in Medicare. The employees who vote in favor will be covered. The employees who vote against will not be covered.

Employee – For purposes of a federal-state agreement, “employee” is defined in Sections 210(j) and 218(b)(3) of the Social Security Act. It includes elected officials of a state or political subdivision and volunteer fire fighters.

Form 1945 – A statement concerning jobs covered by a retirement system, but not covered by Social Security. State and local government employers are required to provide this form to employees hired on or after January 1, 2005 to advise that the position the employee works in is not covered by Social Security.

Majority-vote referendum – An election process in which members of a retirement system group vote for or against participating in Social Security. If a majority of the eligible members of the retirement system vote in favor of coverage, the state may then submit a modification to its agreement under Section 218 to extend coverage to that group.

Modification – An amendment to the written agreement between the state and the Social Security Administration to make the original agreement applicable to the services of employees not previously covered by Social Security, or to modify the original agreement in some other respect.

OASI – Old Age and Survivors Insurance. Also known as Social Security and Medicare.

Optional Exclusion – Those services that the federal law gives the state the option to include or exclude from coverage under the agreement. The political subdivision may request exclusion of the following services:

• All classes of elective positions
• All classes of part-time positions
• Positions compensated solely by fees received directly from the public
• Agricultural labor, to the extent permitted by federal law
• By a student as permitted by federal law

Qualifying public retirement system – A pension annuity, retirement or similar fund or system established by a state or political subdivision that can be considered a replacement for Social Security. Section 31.3121(b)(7)-2 of the Employment Tax Regulations and IRS Revenue Procedure 91-40 explain the requirements for a public retirement system to qualify as a Social Security replacement.

Retirement system – A pension annuity, retirement or similar fund or system established by a state or political subdivision.

Retirement system coverage group – A grouping of employees in positions under a retirement system for Section 218 coverage purposes.

Section 218 agreement – The written agreement between the state and the Social Security Administration to provide Social Security coverage for state and political subdivision employees under Section 218 of the Social Security Act.

For more information about Social Security and Medicare coverage for public employees, contact the State Social Security Administrator at DRS:

Email: drs.oasi@drs.wa.gov

Phone: DRS OASI Program line at 360-664-7165

Additional resources and information

IRS Section 218 Frequently Asked Questions

Social Security Information for State and Local Government Employers

Social Security Information for Government Employees

• Before 1959—if a police officer or fire fighter position was enrolled in a retirement system it was mandatorily excluded from social security coverage.

• January 1, 1959—social security coverage could be acquired for police officer or fire fighter positions covered by a retirement system through a majority vote referendum election process.

• April 1, 1986—most employees, including police officers and fire fighters, hired on or after this date are mandatorily covered for Medicare.

• March 1, 1970—Law Enforcement Officers’ and Fire Fighters’ (LEOFF) retirement system established. Many police officer and fire fighter positions were mandated into LEOFF.

• July 2, 1991—most state and local government employees became subject to mandatory social security and Medicare coverage, unless they were members of a qualified retirement system.

• Before LEOFF, a fire fighter was mandated into the Fireman’s Relief and Pension Fund if the entity had two or more paid fire fighter positions.

• If a police officer or fire fighter position was not enrolled in a retirement system at the time coverage was acquired for the regular employees of the organization, the coverage of the regular employees extended to police officer or fire fighter positions also (for example, if all non-retirement system positions obtained social security coverage, then so did the police officer or fire fighter positions).

• If a police officer or fire fighter position did not exist at the time coverage was acquired for the other employees, coverage for the police officer or fire fighter position depended upon the situation that existed at the time the position was created.

• If, at the time of creation, a police officer or fire fighter position was enrolled in a retirement system, coverage of other employees did not automatically extend to the police officer or fire fighter position. Coverage could only be acquired through a referendum election process.

• In each case, the exact circumstances that existed at the time the police officer or fire fighter position was created must be determined.

• Police officer or fire fighter positions are considered enrolled in a retirement system if enrollment had been actually required or if enrollment was mandated by law. If mandated, it does not matter that the organization might not have taken the necessary actions to enroll the police officer or fire fighter positions in the system, the police officer or fire fighter positions are considered in a retirement system.

• 2008—HB 2510 passed. Medicare-only coverage can be acquired via a divided vote referendum for employees who were hired before April 1, 1986 and have been in continuous employment through the date of the referendum.

For more information about Social Security and Medicare coverage for public employees, contact the State Social Security Administrator at DRS:

Email: drs.oasi@drs.wa.gov

Phone: DRS OASI Program line at 360-664-7165