Definition of OBRA
Part-Time Employees
Seasonal Employees
Temporary Employees
The Omnibus Budget Reconciliation Act of 1990 (OBRA) expanded the definition of
·'employment" for Social Security coverage and FICA tax purposes to include service
performed after July 1, 1991 by a state or local government employee, unless the
employee is a member of the employer's retirement system at the time service is rendered
or is already covered under an agreement between the employer and the Secretary of
Health and Human Services (refe1Ted to as Section 218 agreement).
- Most full-time, state or local public employees are members of their employer's
retirement system. By virtue of that membership, full-time service is not covered
employment for purposes of the Old Age Survivors and Disability Insurance
(OASDI) portion of taxes under the Federal Insurance Contributions Act (FICA),
sometimes called Social Security tax, on the wages of employees paid by
employer with respect to employment
- Generally temporary, seasonal and part-time employees are not members of their
employer's retirement system and their employment may be excluded from
mandatory Social Secmity coverage provided they participate in an appropriate
alternative plan under OBRA.
All participants classified as OBRA must make a mandatory
contribution to the plan equal to 7.5% of gross pay.