social insurance chapter 7. social welfare policy and social programs: a values perspective, by...
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SOCIAL INSURANCESOCIAL INSURANCE
Chapter 7
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
What is Social Insurance?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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
HistoryHistory
• 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
How the program worksHow 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
• 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Social Security RatesSocial Security Rates
• 2006 - for individuals
• OASDI 6.2%
• Medicare 1.45%
• Total 7.65
• Employers match the above amounts
Social Welfare Policy and Social Programs: A Values Perspective, by Elizabeth SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Public PerceptionsPublic 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Importance of Social SecurityImportance 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
• 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Limitations of Social SecurityLimitations 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Future of Social SecurityFuture 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Privatization of Social Privatization of Social SecuritySecurity
• 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 SegalCopyright 2007, Brooks/Cole, a division of Thomson Higher Education
Social ResponsibilitySocial 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