1. SOCIAL INSURANCE
Chapter 7

2. What is Social Insurance?
Collectively funded program for workers and their dependents that provides economic resources at the conclusion of employment
In the U.S. it is commonly known as Social Security
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

3. History The Social Security Act was passed in 1935
It included two parts, social insurance and public assistance
Social Insurance was to be the long-term program that would provide economic security
Public assistance was to be the short-term program to cover those in need for the period of time it would take until everyone was adequately covered by social insurance
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

4. How the program works Workers pay in while working
Pay-in is matched equally by employer
Amount is tracked by the Social Security Administration and placed in the Trust Fund
Amount and years of pay-in are used to calculate benefits
Eligible due to retirement or disability
Benefits are received for as long as live or continue to be disabled
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

5. Social Security is an entitlement program
That means that once a person is eligible, he or she will receive benefits, no matter how much was actually paid into the program
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

6. Social Security Rates 2006 - for individuals OASDI 6.2% Medicare 1.45%
Total
Employers match the above amounts
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

7. Public Perceptions
Today there is strong support for the Social Security Program
Concern rests as to whether the program will be there in years to come
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

8. Importance of Social Security
For elderly persons with low incomes, Social Security provides nearly 90% of their retirement income
Social Security is the main source of income for 2/3’s of all elderly people
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

9. Almost half of all elderly people had incomes below the poverty line BEFORE receiving Social Security benefits
For 22% of workers older than 65, Social Security is the only source of income
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

10. Limitations of Social Security
Social Security is NOT a retirement program, that is, alone it is not enough for a full retirement
Women and people of color, due to lower lifetime earnings or employment not covered, receive lower benefits
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

11. Future of Social Security
Solvency – will there be enough funds in the Trust Fund to cover future retirees?
The answer is, it depends
With planning now, there should be sufficient funds, but those plans need to make changes now
However, they can be rather incremental changes and still have a significant impat
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

12. Privatization of Social Security
Creating private accounts would fundamentally change the Social Security program
Privatization would shift the responsibility, and risk, from the collective public to the individual
Personal financial abilities vary widely, and this variance is part of the reason why policy makers favored the current structure
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education

13. Social Responsibility
The Social Security Program is the best example of a collective social welfare program in the United States
It pools resources and risks, and provides an entitled coverage to all who participate
It is the most important retirement program we have in this country
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth Segal
Copyright 2007, Brooks/Cole, a division of Thomson Higher Education