The United States and Switzerland signed a totalization agreement in 1996, which allows for the coordination of social security benefits between the two countries. This agreement is beneficial for workers who have spent time in both countries and helps to prevent the double taxation of earnings.
Under the agreement, U.S. workers who have worked in Switzerland and paid into the Swiss social security system are able to count those earnings towards their U.S. social security benefits. The same is true for Swiss workers who have worked in the United States.
Without the agreement, workers would be subject to the social security tax in both countries, which could significantly reduce their earnings. Additionally, without the agreement, workers would not receive credit for their earnings in both countries, potentially reducing their social security benefits.
To be eligible for these benefits, workers must have paid into the social security system in both countries for a certain number of years. For U.S. workers, they must have accrued at least 6 credits (or 1.5 years) of coverage under the U.S. social security system. For Swiss workers, they must have paid into the Swiss social security system for at least one year.
It is important to note that the totalization agreement only covers social security benefits and does not extend to other retirement or pension plans. Additionally, the agreement does not affect the eligibility for or the amount of benefits for other public programs such as Medicare or Medicaid.
Overall, the U.S. totalization agreement with Switzerland is a crucial agreement that allows for the coordination of social security benefits between the two countries. This agreement ensures that workers are not double-taxed and that they receive credit for their earnings in both countries, ultimately providing them with a higher and more secure retirement income.