Social security is government-mandated insurance to provide financial assistance to those in need. In the US, it includes Social Security, Medicare, PBGC, and Railroad Retirement programs, with Social Security being the largest. State-sponsored insurance programs for the unemployed also exist. Social insurance is mandatory and based on legal rights and humanitarian considerations, unlike private insurance.
Social security, according to the dictionary, is any insurance program provided or mandated by the government to provide financial assistance to people in need, such as those who are unemployed, sick, disabled, or elderly. People go through hard times, especially when the economy is down and jobs are hard to find. Accidents also happen, and they can make a person unable to find gainful employment and support themselves and their families.
The responsibility to care for people in difficult times lies with the government. It used to be that families had this responsibility, but many people do not have families or are separated from them, or their families may also be unable to support them. Families themselves may need help, such as when the breadwinner dies, loses a job, or is no longer able to work due to physical disability. Therefore, the government has to intervene, and it does so by providing social insurance. In the United States, these are the government-sponsored programs that provide social security; the Social Security Administration, Medicare, the Pension Benefits Guaranty Corporation (PBGC) program, and the Railroad Retirement program.
The Social Security system offers a type of social security, which is the main and probably the best known component of the list. It is financed by mandatory taxes collected by the government. It provides four main benefits, which are collectible in cases of retirement or old age, disability, survivor or dependency, and death. The Social Security system occupies the largest part of the federal budget, with almost 21%. An additional 20% of the federal budget is allocated to Medicare, another form of social security.
Medicare provides health benefits for the elderly, sick, or disabled who meet certain criteria and is another form of social security. Benefits generally include hospitalization expenses, medical procedures, and prescription drugs. In the meantime, the PBGC encourages citizens to enroll in voluntary pension plans so that they can enjoy future pension benefits. It is not financed by tax revenue, but primarily by insurance premiums and investment income from insurance. The Railroad Retirement Program is overseen by the United States Railroad Retirement Board (RRB) and provides retirement benefits for railroad workers and their families.
In addition to these federal government insurance programs, there are also state-sponsored insurance programs for the unemployed. Social insurance is different from private insurance, which is largely self-paid voluntary insurance, and where the benefits provided are proportional to the amount of insurance purchased. Unlike private insurance, access to social insurance is mandatory and based on legal rights and humanitarian considerations, rather than an insurance contract.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
