May 6, 2021
Social Security: Who Is Covered Under the Program?
Social Security pays cash benefits to about 65 million
the workforce at the time). Initially, the program provided
people each month. In all cases, a Social Security
monthly pensions for insured workers aged 65 or older.
beneficiary becomes eligible for benefits either by working
in a job that is covered by Social Security (a covered
Over the years, Congress expanded Social Security
worker), by having a close family relationship to a covered
coverage, bringing most employees and self-employed
worker, or both (among other requirements). For people
workers into the system. Today, most jobs in the United
who work in jobs that are covered by Social Security,
States are covered by Social Security, whether the work is
participation is mandatory. Covered workers and their
performed by U.S. citizens or noncitizens, with some
employers are required to pay Social Security payroll taxes.
exceptions. In this context, the United States is defined as
In 2021, workers pay 6.2% of earnings in covered
the 50 states, the District of Columbia, the Commonwealth
employment up to a maximum earnings of $142,800. The
of Puerto Rico, the territories of Guam and American
maximum is adjusted annually based on average wage
Samoa, the U.S. Virgin Islands, and the Northern Mariana
growth in the national economy. Employers pay a
Islands. In some cases, work performed outside the United
corresponding amount—6.2% of the worker’s covered
States by U.S. citizens or resident aliens (noncitizens) is
earnings up to the annual maximum. Self-employed
covered by Social Security (for example, if the person is
workers pay 12.4% of net earnings up to the annual
employed by an American employer, employed by a
maximum.
foreign affiliate of an American employer that has elected
coverage for its employees, or, under certain circumstances,
To become eligible for benefits, a worker must have a
self-employed). See Internal Revenue Service (IRS), Social
sufficient connection to covered employment, which is
Security Tax Consequences of Work ing Abroad. Over the
measured in terms of Quarters of Coverage (QCs). In 2021,
years, Congress also expanded the types of benefits
a worker earns one QC for every $1,470 in covered
available under the program. For example, benefits were
earnings up to a maximum of four QCs for the year (based
provided for the worker’s dependents and survivors in 1939
on covered earnings of $5,880 or more). The amount
and for disabled workers in 1956.
needed to earn one QC is adjusted annually based on
average wage growth in the national economy. When a
Major Categories of Work Not Covered
worker has earned a sufficient number of QCs, he or she is
The rules surrounding Social Security coverage and
insured under the program. The number of QCs needed for
exceptions are extensive. This In Focus provides an
insured status varies depending on the circumstances and
overview of the major categories of work that are not
type of benefit, ranging from a minimum of six QCs to a
covered by Social Security. If the work is not covered, the
maximum of 40 QCs. Insured status allows a worker to
earnings are not subject to Social Security payroll taxes ,
establish eligibility for retired-worker or disabled-worker
and they do not count toward the worker gaining insured
benefits and for the worker’s family members to establish
status under the program (i.e., they do not count toward
eligibility for benefits in the event of the worker’s
establishing benefit eligibility for the worker and his or her
retirement, disability, or death. See CRS Report R42035,
family members). For detailed information on the definition
Social Security Primer.
of employment for Social Security purposes, see Section
210 of the Social Security Act (42 U.S.C. §410); Title 20,
Most jobs in the United States are covered by Social
Part 404, of the Code of Federal Regulations, Subpart K;
Security. The Social Security Administration (SSA)
and SSA, Coverage and Exceptions.
estimates that about 94% of workers in paid employment
and self-employment are covered under the Social Security
Civilian federal employees hired before 1984. Most
program and that an estimated 176 million people will work
civilian federal employees hired before 1984 are
in covered employment in 2021. This In Focus discusses
covered by the Civil Service Retirement System, which
Social Security coverage and the major exceptions to
does not have a Social Security component. Civilian
mandatory participation in the program.
federal employees hired in 1984 or later are covered by
the Federal Employees’ Retirement System, under
Nearly Universal System
which participation in Social Security is mandatory. See
Social Security began as a compulsory federal old-age
CRS Report 98-810, Federal Employees’ Retirement
benefits program established under Title II of the Social
System: Benefits and Financing.
Security Act of 1935 (P.L. 271, 74th Congress). The original
Some state and local government employees. State and
program covered employees under the age of 65 in
local government employees are not required to
commerce and nonagricultural industry (excluding
participate in Social Security if they participate in public
railroads) in the 48 states that existed at the time, plus
retirement systems through their employers that meet
Alaska, Hawaii, and the District of Columbia (about 56% of
certain requirements (see IRS, Pub. 963, Federal-State
https://crsreports.congress.gov
Social Security: Who Is Covered Under the Program?
Reference Guide, Chapter 6). However, they may elect
United States has a totalization agreement is not covered
coverage as a group through a coverage agreement
if the person works in the United States for less than five
between the state and SSA (known as a Section 218
years. See SSA, International Agreements. In addition,
agreement). Coverage is mandatory only for those state
work performed by noncitizens under certain
and local government employees who do not participate
nonimmigrant (temporary) visas is not covered. For
in public retirement systems that qualify as alternatives
example, work performed by foreign academic students
to Social Security. SSA data shows that there were 23.2
(F-1 visa), foreign vocational students (M-1 visa),
million state and local government employees in 2018.
foreign exchange visitors (J-1 visa), international
Of those, 16.6 million (71.5%) were covered by Social
cultural exchange visitors (Q visa), and foreign
Security; 6.6 million (28.5%) were not covered. Across
agricultural workers (H-2A visa) is not covered. See
the states, the percentage of state and local government
SSA, Coverage of Work Performed by Certain
employees with Social Security coverage varied widely,
Nonimmigrant Aliens; and IRS, Aliens Employed in the
ranging from 3% to 97%. See SSA, State and Local
U.S.—Social Security Taxes.
Government Employers.
For certain types of work, there are specific coverage
Railroad workers. Railroad workers have their own
thresholds, as described below.
federal insurance system that dates back to the 1930s.
Today, programs administered by the U.S. Railroad
Farm work is excluded from coverage if the employer
Retirement Board provide retirement, survivor,
pays the individual less than $150 in cash for the year
disability, unemployment, and sickness benefits to
and the employer’s total expenses for agricultural labor
workers who have spent substantial portions of their
are less than $2,500 for the year. Work performed by
careers in railroad employment and their family
seasonal farm workers (hand-harvest laborers) is
members. Although a separate system, it is closely tied
excluded if the employer pays the individual less than
to the Social Security program. For example, if a
$150 in cash for the year. See IRS, Pub. 51, Circular A,
railroad worker does not meet the minimum
Agricultural Employer’s Tax Guide (Section 4).
requirements for a railroad pension, his or her railroad
earnings count toward his or her Social Security
Self-employed workers with net earnings below $400
earnings credits. See U.S. Railroad Retirement Board.
for the year are generally excluded from coverage. See
SSA, Pub. No. 05-10022, If You Are Self-Employed.
Certain family employment. Certain family
employment is excluded from Social Security coverage.
Election officials and election workers with earnings
For example, the service of a child under the age of 18 is
below $2,000 in 2021 are generally excluded from
not covered if the child works for his or her parent in a
coverage. The dollar threshold is adjusted annually
trade or business, and the trade or business is a sole
based on average wage growth in the national economy.
proprietorship or a partnership in which each partner is a
See SSA, Election Officials and Election Workers.
parent of the child. See IRS, Family Help.
Household employees with earnings below $2,300 in
Certain work performed by students. Work performed
2021 are excluded from coverage. The dollar threshold
by students who are employed by the schools, colleges,
is adjusted annually based on average wage growth in
or universities where they are pursuing courses of study
the national economy. See IRS, Employment Taxes for
is generally not covered if education is predominant in
the student’s employment relationshi
Household Employees.
p with the
academic institution. If the institution is operated by a
Social Goals of the Program
state or local government, the work may be covered
Social Security is the nation’s largest federal program. As a
under the terms of a Section 218 agreement between the
social insurance system, Social Security is funded primarily
state and SSA. See IRS, Student Exception to FICA Tax.
with payroll taxes paid by covered workers and employers,
Certain members of the clergy and others. Ministers,
and it provides monthly cash benefits to insured workers
members of religious orders who have not taken a vow
and their family members when the worker experiences a
of poverty, Christian Science practitioners, and
loss of earnings due to the worker’s retirement, disability,
members of recognized religious sects (such as the
or death. Social Security provides benefits to people of all
Amish and Mennonites) are automatically covered by
ages, including retired workers, disabled workers, spouses,
Social Security, but they may file for an exemption with
former spouses, surviving spouses, and dependent children.
the IRS on the grounds of conscience or religious
For many beneficiaries, Social Security represents a sizable
principle. Members of religious orders who have taken a
share of total income and serves to keep them out of
poverty. Given Social Security’s role in reducing poverty,
vow of poverty are not automatically covered, but the
religious order may elect coverage for its members by
which benefits the nation as a whole, some argue that some
filing a request with the IRS. See IRS, Pub. 517 (2020),
noncovered workers should be brought into the system to
Social Security and Other Information for Members of
share in the program’s broader social goals. For example,
the Clergy and Religious Workers.
the Social Security Advisory Board and others have
proposed making Social Security coverage mandatory for
Certain work performed by noncitizens. In general,
all newly hired state and local government employees.
work performed by noncitizens in the United States is
covered by Social Security; however, there are
Dawn Nuschler, Specialist in Income Security
exceptions. For example, work performed by a person
who is a citizen of a foreign country with which the
IF11824
https://crsreports.congress.gov
Social Security: Who Is Covered Under the Program?
Disclaimer
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