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 Insurance

Motive The inspiring motive of There is no motive as such
social insurance is the in case of commercial
maintenance of minimum insurance.
level of living.

Risk It is undertaken to meet a It is undertaken to provide

chain of contingencies of against an individual’s risks
diverse nature and only.
intensity.

Benefit Benefits are usually much Benefits are in proportion

larger then contribution to the contribution made,
made. i.e., premium paid.

Option Social insurance is generally Commercial insurance is

compulsory. 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.