BASIC (12-03)

A. ABSOLUTE COVERAGE GROUPS

States can extend Social Security coverage to absolute coverage groups beginning January 1, 1951. Federal law allows a State to provide coverage for all the absolute coverage groups of an entity or to provide coverage for selected absolute coverage groups. Most States provide coverage for all absolute coverage groups of an entity, i.e., the governmental and all proprietary functions. By this action, the State extends coverage to all present and future employees of the entity who are not in positions under a retirement system. When this practice is followed, the conditions of coverage for the employees in all of the functions of an entity must be uniform, i.e., the same effective date of coverage and the same optional exclusions must apply.

B. DESIGNATED COVERAGE GROUPS

A State may extend coverage to designated absolute coverage groups of the State or a political subdivision. It may provide coverage for the governmental function as a group and for each proprietary function as separate coverage groups. When coverage is extended to these designated groups, the State must specifically identify each group as a designated absolute coverage group and furnish the effective date of coverage and any optional exclusion for each group. Where a State has provided coverage to designated absolute coverage groups, the State may, by modifying its agreement, extend that coverage to any absolute coverage group in the State. If the State extends coverage to selected absolute coverage groups and subsequently decides to cover any of the remaining absolute coverage groups of the same entity, (e.g., newly created functions or preexisting non-covered functions), each remaining absolute coverage group must be included under the agreement as a separate coverage group.

It is possible for a State that provided coverage for designated coverage groups of an entity to later extend coverage to all its absolute coverage groups. In this way, the State provides automatic coverage for the non-covered current employees as well as for the future employees of the entity. To do this, the State is required to make the coverage uniform for all of the groups involved, i.e., coverage for all the groups must be made consistent with the broadest coverage of any of the groups. This "conversion" from the coverage of designated coverage groups to the coverage of all the absolute coverage groups is accomplished by an appropriate modification to the State's agreement.