-nature of social insurance -OASDI and Medicare -unemployment insurance -workers compensation
Social insurance programs are necessary for several reasons. First, they are often enacted into law to help solve a complex social problem. The problem may be so serious that direct government intervention is necessary. Second, social insurance programs are necessary because certain perils are difficult to insure privately, such as the peril of unemployment.
Finally, these programs are necessary to provide a base of economic security to the population. Social insurance programs provide a layer of financial security to most persons against the long-term financial consequences of premature death, old age, occupational and nonoccupational disability, and unemployment.
Reasons for Social Insurance 1.To help solve social problems 2. To provide coverage for perils that are difficult to insure privately 3. To provide a base of economic security
Basic Characteristics of Social Insurance 1. Compulsory programs 2. Floor of income 3. Emphasis on social adequacy rather than individual equity
4. Benefits loosely related to earnings 5. Benefits prescribed by law 6. No means test 7. Full funding unnecessary 8. Financial self-supporting
Old Age, Survivors, Disability, Insurance (OASDI)
Determination of Insured Status 1.Fully insured You are full insured for retirement benefits if you have 40 credits.
2.Currently insured you have earned at least six credits during the last 13 calendar quarters ending with the quarter of death, disability, or entitlement to retirement benefits.
3.Disability insured The number of credits required to be disability insured depends on your age when you become disabled. If you are age 31 or older, you must have earned a certain number of credits as shown by the following:
Disabled at age Credits needed 31 through 4220 4422 4624 4826 5028 5230 5432 5634 5836 6038 62 or older40
In addition, at least 20 of the credits must be earned during the past 10 years immediately before you became disabled. Younger workers under age 31 can acquire a disability-insured status with fewer credits. For ages 24 though 30, you must have worked half the time between age 21 and the time you become disabled. For example, a worker disabled at age 27 needs credit for three years of work out of the past six years.
If you become disabled before age 24, you must have earned six credits during the three-year period ending when your disability begins. Finally, blind persons are required only to have a fully insured status. They are not required to meet the recent-work test requirement that applies to other disability applicants.
Retirement benefits: paid as a monthly income to people who are fully insured and are at least age 62 Full retirement age Early retirement age Monthly retirement benefits Delayed retirement credit Earnings test
Survivor benefits: paid to the dependents of a fully or currently insured deceased worker
Disability benefits: must be disability insured, incur a five- month waiting period, be unable to perform any substantially gainful activity, and have a condition that is expected to last at least 12 months or result in death
Medicare benefits: available to most people age 65 or over, those who need kidney dialysis or a transplant, and those who have been entitled to disability benefits for at least 24 months
Hospital Insurance (Part A) provides inpatient hospital care, inpatient care in a skilled nursing facility, home health care services, and hospice care. Supplementary Medical Insurance (Part B) provides for the payment of physicians services, outpatient hospital services, home health care services, and other medical and health care services.
Medicare + Choice program Medigap Insurance Under Medicare + Choice, beneficiaries have a number of choices. They can elect the original Medicare plan; the original Medicare plan with a Medigap plan; various Medicare + Choice plans, such as a managed care plan; or a private fee-for-service plan.
Financing Social Security 1. Taxable wage base 2. Tax rates
Objectives of Unemployment Insurance 1. Provide cash income during short- term involuntary unemployment 2. Help unemployed workers find jobs 3. Encourage employers to stabilize employment 4. Help stabilize the economy by maintaining purchasing power
Coverage 1. Private firms 2. State and local governments 3. Agricultural firms under certain conditions 4. Domestic employment under certain conditions
Eligibility Requirements 1. Have qualifying wages and employment 2. Be able and available for work 3. Actively seek work 4. Be free from disqualification Serve a one-week waiting period in most states
Benefits Benefit amount—varies with the worker’s past wages, within certain minimum and maximum amounts that vary by state Duration of benefits—regular benefits paid for a maximum of 26 weeks in virtually all jurisdictions Extended benefits—up to 13 weeks of additional benefits in states with high unemployment
Financing 1.Employers pay a payroll tax. 2.Tax revenues go into a federal trust fund. 3.Experience rating gives firms with favorable records lower tax rates.
Problems and Issues 1. Decline in the proportion of unemployed who receive benefits 2. Inadequate reserves in many states 3. Imperfect experience rating formulas
Development of Workers Compensation 1. Common law stage 2. Employer liability laws 3. Workers compensation laws
Objectives of Workers Compensation 1. Coverage of most workers for occupational injury and disease 2. Substantial replacement of lost earnings 3. Sufficient medical care and rehabilitation services 4. Encouragement of safety 5. Reduction in litigation
Types of Laws (virtually all states have compulsory laws)
Employer's Options in Complying with the Law 1. Buy a workers compensation policy from a private insurer. 2. Qualify as a self-insurer. 3. Buy insurance from a competitive or monopolistic state fund.
Covered Occupations 1. Most occupations covered 2. Exemptions in some states: small employers 3. Excluded occupations or less than complete coverage: farm workers, domestic workers, and casual workers
Eligibility Requirements 1. Work in a covered occupation. 2. Injury or disease must be job-related
Types of Benefits 1. Unlimited medical care 2. Disability income benefits 3. Death benefits 4. Rehabilitation services