What Are Social Security Totalization Agreements?

International Social Security Agreements, often called Totalization Agreements, are bilateral treaties between the United States and other nations. These agreements serve two primary functions for individuals who work abroad. First, they prevent dual social security taxation, which occurs when a worker is required to pay social security taxes on the same earnings to both the U.S. and their country of employment. This coordination ensures that an individual contributes to only one country’s system at a time.

The second purpose is to help individuals who have divided their careers between two countries qualify for social security benefits. Many national social security systems have minimum contribution periods to become eligible for benefits. Totalization Agreements allow workers to combine their periods of coverage from both countries to meet these minimum requirements. These agreements cover U.S. Social Security and Medicare taxes, but they do not extend to benefits under the Medicare program itself.

Determining Social Security Coverage

The foundation of determining which country’s social security system applies is the “territoriality rule.” This principle dictates that a worker is subject to the social security laws of the country where they are physically performing services. For instance, if you are employed in a partner country, you and your employer would pay social security taxes only to that country’s system, not to the United States.

A significant exception to the territoriality rule exists for employees on temporary assignment. If an American employer sends an employee to work in a country that has a totalization agreement with the U.S. for five years or less, the employee remains covered only by the U.S. Social Security system. This provision is designed for workers who have a continuing employment attachment to their U.S.-based employer and intend to return.

To prove an exemption from a foreign country’s social security taxes under an agreement, a worker must obtain a Certificate of Coverage. For a U.S. worker sent abroad, this certificate is issued by the Social Security Administration (SSA). The worker presents this document to their employer in the foreign country as official proof that they are continuing to pay into the U.S. system and are therefore exempt from the host country’s corresponding taxes.

Qualifying for Benefits Through Totalization

Totalization Agreements provide a method for individuals who lack sufficient work credits in one country to qualify for benefits. The U.S. system requires 40 credits, equivalent to about 10 years of work, to be eligible for retirement benefits. If a worker has earned at least six credits of U.S. coverage but does not meet the full requirement, the Social Security Administration (SSA) can consider periods of coverage from a partner country to help them qualify.

Consider a worker who has earned 24 U.S. credits and has 5 years of coverage in a partner country. While they fall short of the 40-credit U.S. requirement, the agreement allows their 5 years of foreign coverage to be combined with their U.S. credits. This combination helps them meet the 10-year eligibility threshold for U.S. retirement benefits. The same principle applies to qualifying for disability and survivor benefits, which have their own specific work credit requirements.

It is important to understand that combining credits only determines eligibility for benefits, not the amount of the payment. Each country pays a prorated benefit based exclusively on the earnings and work history in that specific country. The benefit amount from the U.S. will be proportional to the share of the worker’s career that was completed under the U.S. system.

Information Needed to Claim Benefits

Before initiating a claim for benefits under a totalization agreement, it is necessary to gather specific personal and employment information, including:

• Your full name, date of birth, and country of citizenship
• Your U.S. Social Security number and your social security identification number from the foreign country
• A comprehensive work history detailing the start and end dates of your employment in both countries

The primary application form for this process is the SSA-2490-BK, titled “Application for Benefits Under a U.S. International Social Security Agreement.” It is important to obtain the most current version of this form from the Social Security Administration’s official website. Because not all countries use the same form, you should verify the correct one for your specific claim by consulting the resources on the SSA’s international agreements webpage.

The Application Process

If you reside in the United States, you can file your application package at any local Social Security office. If you are living abroad, you have the option to file with the social security agency of the country you are in. When you file with one agency, you can request that your application also be treated as a claim for benefits from the other country.

After you submit the application, the two countries’ social security agencies begin a coordinated process. They will exchange the information provided in your application, including your work history and periods of coverage. This exchange is necessary for each agency to verify the credits you earned and to determine your eligibility for a prorated benefit.

The processing time for a claim under a totalization agreement can be lengthy due to the need for international communication and verification between government agencies. It is not uncommon for a final decision to take several months or longer. The agencies will notify you directly once a determination has been made regarding your eligibility and the amount of any benefit you are entitled to receive from each country.