Social Assistance & Social Insurance

By K. Mohanlal

Social security• The comprehensive federal program of benefits providing

workers and their dependents with retirement income, disability income, and other payments. The social security tax is used to pay for the program.

• All social security schemes furnished by the government are broadly classified into two types:

Social Assistance

Social Insurance

Social Assistance

• Social assistance refers to the assistance rendered by the government to the needy persons without asking them to make contributions to be entitled to get such assistance.

• Workmen’s compensation, maternity benefits, old age pensions, etc. are the examples of social assistance.

Types of social assistance In general, social assistance programmes are

of two types:

Transfer programmes Social services

Cont…

• Transfer programmes provide cash or in-kind benefits for individuals or families in the

programme.

• Social services provide specialized assistance targeted toward vulnerable individuals or families in or at risk of social exclusion due to low education or skills, disability, alcohol or drug addiction; or for orphans or single elderly people unable to care for themselves.

Social assistance

Categories: Public works Cash or near-cash transfers (UCTs, CCTs, food vouchers,

seed vouchers) In-kind transfers (food rations, school feeding programs, seeds and agricultural inputs) Price subsidies (e.g., on rice and fuel) Fee waivers (health care, schooling, utilities, transport, etc.) Welfare or social services

Social Insurance

• Social insurance refers to a scheme of maintaining fund from the contributions made by the employees and employer, with or without a subsidy from the government.

• Examples of social insurance are provident fund and group insurance.

Types of social insurance• Medicare Medicare covers many of the medical expenses of elderly and disabled workers and veterans. Medicare has several different programs levels, which affect the types of benefits received by the beneficiaries. • Worker's Compensation Worker's Compensation is a social insurance program designed

to protect employees who experience on-the-job injuries. • Unemployment Insurance Unemployment Insurance offers temporary financial protection for workers who experience unexpected layoffs due to lack of work and other reasons that are no fault of the employee.

Features of social insurance

• It is financed entirely by or mainly from the common monetary contributions of workers, employers and the state. This fund takes care of all the benefits paid in

cash or kind.• Second, the state and employers make a major

contribution to this fund, while the employees pay only a nominal amount, according to their capacity to pay.

• Third, when there is a total or partial loss of income, these benefits, within limits, ensure the maintenance of the beneficiaries’ minimum standard of living.

Cont…

• Fourth, social insurance benefits are granted without an examination of an individual’s needs and without any means test, without affecting the sense of self-respect of the beneficiary.

• Fifth, these benefits are so planned as to cover, on a compulsory basis, all those who are sought to be covered.

• Lastly, social insurance reduces the suffering arising out of the contingencies faced by an individual--contingencies which he cannot prevent.

Difference between social Insurance and commercial Insurance

Bases Social Insurance Commercial InsuranceMotive The inspiring motive of

social insurance is the maintenance of minimum level of living.

There is no motive as such in case of commercial insurance.

Risk It is undertaken to meet a chain of contingencies of diverse nature and intensity.

It is undertaken to provide against an individual’s risks only.

Benefit Benefits are usually much larger then contribution made.

Benefits are in proportion to the contribution made, i.e., premium paid.

Option Social insurance is generally compulsory.

Commercial insurance is necessarily voluntary.

Conclusion

• Strictly speaking, these two types of social security measures may be said to be the two faces of the same coin. As a matter of fact, both of them are integral parts of a social security system.