Workers who have shared their careers between the United States and a foreign country may not be entitled to pensions, survivor benefits or disability insurance (pensions) from one or both countries because they have not worked long or recently enough to meet minimum conditions. Under an agreement, these workers may benefit from partially U.S. or foreign benefits on the basis of combined or “totalized” coverage credits from both countries. Since the late 1970s, the United States has established a network of bilateral social security agreements that coordinate the U.S. social security program with similar programs in other countries. This article provides a brief overview of the agreements and should be of particular interest to multinationals and people who work abroad during their careers. The goal of all U.S. totalization agreements is to eliminate dual social security and taxation, while maintaining coverage for as many workers as possible under the country where they are likely to have the most ties, both at work and after retirement. Any agreement aims to achieve this objective through a series of objective rules. Other features of U.S.
law increase the likelihood that foreign workers in the United States will also face dual coverage. U.S. law provides mandatory social security for benefits paid as workers in the United States, regardless of the nationality or country of residence of the worker or employer, regardless of the length of residence of the worker in the United States. Unlike many other countries, the United States generally does not provide a guarantee exemption for non-resident foreign workers or workers who have been sent to work for a short period of time within their borders. This is why most foreign workers in the United States are covered by the U.S. program. One of the general beliefs about the U.S. agreements is that they allow dual-coverage workers or their employers to choose the system to which they will contribute.
That is not the case. The agreements also do not change the basic rules for covering the social security legislation of the participating countries, such as those that define covered income or work. They simply free workers from coverage under the system of either country if, if not, their work falls into both regimes. Select the country`s name from the list below for information on how to avoid U.S. and foreign social security double taxation and how to claim benefits under the agreement with a particular country. To qualify for benefits under the U.S. Social Security program, a worker must have earned enough work credits, known as insurance quarters, to meet the “insurance status requirements” specified. For example, a worker who turns 62 in 1991 or later generally needs 40 calendar terms to be insured for old age pensions. As part of a totalization agreement, SSA accounts for periods of coverage acquired by the worker under the social security program of a contracting country when a worker has some U.S.
insurance coverage but is not sufficient to qualify for benefits. Similarly, a country that is a party to an agreement with the United States takes into account a worker`s coverage under the U.S. program when it is required for that country`s social security benefits. If the combined credits in the two countries allow the worker to meet the eligibility requirements, a partial benefit may be paid depending on the proportion of the worker`s total career in the paying country. The agreement with Italy is a departure from other US agreements because it does not regulate the people cashed in. As in other agreements, the basic criterion of coverage is the territorial rule.