20 CFR §404.1208

1. (a)Definition. An ineligible is an employee who, on first occupying a position under a retirement system, is not eligible for membership in that system because of a personal disqualification like age, physical condition, or length of service.
2. (b)Coverage of ineligible employees. A State may, in its agreement or any modification to the agreement, provide coverage for the services of ineligible employees in one of three ways:
   1. (1)As part of or as an addition to an absolute coverage group;
   2. (2)As part of a retirement system coverage group covering all positions under the retirement system; or
   3. (3)As part of or as an addition to a retirement system coverage group composed of those members in positions in a retirement system who chose coverage.