Social Insurance Agreement

Since the 1970s, U.S. negotiators have entered into bilateral agreements with 28 major trading partners to coordinate social security coverage and social benefits for people living and working in more than one country. They are called “totalization agreements” and are similar in the function and structure of contracts and are legally considered to be executive agreements of Congress concluded in accordance with the law. The agreements have three main objectives: the elimination of double taxation of income, the granting of protection to workers who have shared their professional careers between the United States and another country, and the full payment of benefits to residents of both countries. This article briefly describes totalization agreements, tells their stories and discusses proposals to modernize and improve these agreements. Despite the fact that the agreements aim to allocate social security to the country where the worker is most attached, unusual situations occasionally arise, where strict enforcement of the rules of agreement would result in unusual or unjustified results. For this reason, each agreement contains a provision allowing the authorities of both countries to grant exemptions from the normal rules if both parties agree. An exception could be granted, for example, if the foreign award of a U.S. citizen was unexpectedly extended by a few months beyond the 5-year limit under the self-employed rule.

In this case, the worker could benefit from ongoing U.S. coverage for the additional period. Under these agreements, Australia equates social security periods/stays in these countries with periods of Australian residence in order to meet minimum qualification periods for Australian pensions. In other countries, periods of Australian working life are generally counted as social security periods to meet their minimum payment periods. Typically, each country pays a partial pension to a person who has lived in both countries. 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. To date, the United States has entered into totalization agreements with 28 countries; Three other agreements have been signed, but they are not yet in force. A list of all totalization agreements is listed in Appendix C. The convention meets the five objectives of the social security agreements and includes all workers, family members and survivors who are nationals of a contracting party to the agreement and who are or have been subject to one of the parties to the social security scheme. Cash and in-kind benefits are included in the agreement with respect to age, disability, death of a family member, work injury, maternity or illness, including family allowances, which are granted in all legal social security schemes.

For the theoretical calculation of salary, SSA applies the standard method of calculating social security benefits in the United States (described in 20 C.F.R.

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