If you live in the United States of America, you must be familiar with the term social security. This is one of the ways of how the government is trying to take care of all its citizens. But you might also hear about social insurance and wonder, what is the difference between social security and social insurance?
Social Insurance
The system of social insurance is the creation of President Franklin D. Roosevelt and was enacted in 1935. This system was created to protect all American citizens from various setbacks that could happen anytime such as loss of earnings due to old age, disability, and many others. The late president called these setbacks as vicissitudes of life.
This system is implemented by government agencies on all levels which are local, state and the highest one federal. The social insurance system both directly and indirectly benefits almost all of the United State citizens and also helps to support the economy in general.
There’s no exact definition of social insurance but under the narrow definition, it could be understood as government programs where workers would pay some money from their salary during the time they work in a certain place. Then when they are retired, have a disability or get involuntary unemployment, they would have the right to qualify for the benefits.
Social Security
Meanwhile, social security is a more popular term for one of the types of social insurance programs by the government. Social security refers to OASDI which is short for Old-Age, Survivors, and Disability Insurance. This is the largest program income-maintenance in all of the United States of America. So now, you know the difference between social security and social insurance.
This program is specifically designed to provide monthly benefits for workers who have to deal with loss of earnings due to disability, retirement and death. Almost all of the citizens of the United States of America are covered by this program which is around 96% of the jobs in the country. Since this is the most well-known type of social insurance, people simplified the term from OASDI to social security.
For almost every single one in the United States of America, social security is an important source of income when they hit retirement. 3 in 5 retirees that are 65 years and older are relying on this program for half of their previous income to say the least.
Not only for retired workers, social security is also important for the families if workers passed away. Around 98% of wives and young children of workers are eligible to get benefits if their working father and husband were to die. In the term of long or permanent disability, the workers’ families aged 21-64 are also protected.
There you go, the difference between social security and social insurance. Social security is merely another term for the largest and most well-known type of social insurance which covers almost all jobs in the USA.