Social security and social insurance can be quite confusing if you do not clearly know what these words mean. Let’s explore each term below:
Table of Contents
What is Social Security?
Social security is used for Old-Age, Survivors, and Disability Insurance (OASDI) run by a federal agency in the United States of America known as the Social Security Administration (SSA). This is a lump sum payment paid to those in need. Either as a retirement benefit, disability payments or survivor benefits. In simpler terms, social security is a program designed to support those with little to no income.
How does Social Security work?
Social security is a type of insurance where workers pay through payroll withholding where they work. You get different types of benefits like retirement, survival, old age or disability benefits.
If you have been paying into the social security system for 10 years, you are automatically eligible for early retirement benefits at the age of 62. However, if you wait until your ‘full retirement age’, you will receive a higher monthly benefit. You can use the Retirement Estimator on the SSA website to find out your benefits at different retirement ages.
If you are unable to work due to a mental or physical disability lasting more than a year, you will be eligible for the social security disability benefits. However, to determine your disability severity, you might have to take certain tests. Family members of disabled individuals may also be eligible for disability benefits.
If you pass away, your wife and children may be eligible for survivor benefits based on your work earnings. This also includes surviving spouses over the age of 60. However, it is important to note that these surviving spouses should not have remarried. A surviving spouse who is also caring for a child younger than 16 or disabled would also be eligible for these benefits.
For children, these benefits may be provided if they are under 18 or disabled. However, step children, grand children etc may be eligible for survivor benefits based on their circumstances. Parents who were depending on the deceased’s income to survive would be eligible.
If you are one of those people that usually wonder, “what is my social security benefit?”, you can get yourself registered on the Social Security Administration website where you would be able to calculate your social security benefit based on your earnings, age or other factors. People wondering, “what is my social security number?”, can also find that out on the Social Security Administration website.
What is Social Insurance?
Social insurance is a program designed by the government to check and ensure that individuals are covered by any risk that might lead to financial trouble. For example, unemployment, old-age, disability, death etc.
Social insurance coverage extends to protecting you from any economic risk and is considered to be a type of social security, hence the usual confusion between the terms.
However, social insurance depends on the individual’s contributions for their claims which acts as an insurance premium. This basically means the concept has been built in such a way that your pay out depends heavily on how much you have worked in your whole life.
Acceptance into the social insurance program is not always guaranteed and you may be required to meet certain expectations to be eligible for the program.
Social insurance benefits may also include health care benefits provided as monetary compensation among the same social security benefits like old-age, survivor and disability benefits. It typically includes hospitals and doctors who agree to see people under this plan. These providers are then compensated by the government.
Types of Social Insurance:
The Bottom Line
So to sum it up, there is not much difference between social security and social insurance. Social security is a government handled program that provides benefits to people who cannot earn themselves. This is done from their own contributions that they have made while working their whole lives, for example, for retired people. These individuals are then paid out of the fund that was accumulating all their money for years. Social insurance is essentially the same thing as it is a part of the social security program. It also provides healthcare benefits, provident funds and pensions as well as covers all the risks that might be sustained from economic uncertainty. These include unemployment and even things like disabilities or the death of the sole earner of the family.
So to answer the question, what is the difference between social security and social insurance, there is not much difference since social insurance is a part of the social security program and provides the same benefits as the social security program.