The expansion of social assistance should proceed in tandem with mobilizing the resources required. Universal approaches reduce hurdles such as program fragmentation and eligibility determination.
The traditional financing model of social insurance mixes redistribution with risk-sharing functions and requires mandatory earnings-based contributions that are perceived by many as taxes on work. A rethinking of the model can disentangle these functions and may allow for a combination of subsidized coverage and consumption smoothing instruments.
The Basics
The ביטוח לאומי program is a safety net that provides retirement, disability and survivor benefits. You contribute a percentage of your earnings to the Social Security system through payroll taxes, and you receive benefits when you retire or become disabled. You also qualify for benefits if you are severely disabled or die.
Otto von Bismarck is widely credited with inventing social insurance—benefits for workers in formal wage employment financed by dedicated taxes on wages. Although this approach worked well in rich countries, it has limited utility in developing countries where stable and defined employer-employee relationships are not common. And it does not easily accommodate informal workers, who account for two-thirds of the labor force in many emerging economies and up to 1 in 10 in India and sub-Saharan Africa (Figure 6.4).
A rethinking of social insurance is needed. Enhanced social assistance should be complemented by insurance that does not depend on formal wage work, providing subsidized coverage against the risk of livelihood disruptions and consumption smoothing. Mandatory savings could be replaced by “nudged” or voluntary contributions to an investment-based insurance scheme that disentangles redistribution from the function of providing a basic income. Taking this step would reduce the burden on labor regulation and make it easier to manage risks in the labor market, while reducing incentives for firms to replace workers with robots.
SSI
The Supplemental Security Income (SSI) program provides monthly cash benefits to help meet basic needs for food, clothing, and shelter. It helps disabled individuals with limited income and resources. It also helps widows and widowers with a low income, and adults age 65 or older who do not have enough work to qualify for Social Security retirement.
The SSI benefit amount depends on your state of residence and how much you have in assets and income. The home you live in, one car, and some household furnishings are exempt from SSI asset rules. Other income, such as wages, an allowance from parents, and some government benefits reduce a person’s SSI payment dollar for dollar.
If a disability-related student receives financial aid, works while attending school or is provided with student housing and meals, these can also affect her SSI payment. Students, their family members and trustees of a special needs trust should understand how these rules may apply to them.
People with disabilities who receive SSI can automatically qualify for Medicare health insurance coverage after two years. Some states have additional SSI-related provisions that offer additional health insurance coverage to people with disabilities, such as the Medically Needy Option and the Special Income Level Option. Both options allow people to spend down their assets until they reach the SSI resource limit of $300,199 per year or approximately 222 percent of the federal poverty guideline.
Disability
If you have worked long enough in the workforce to earn social security credits and you have a severe medical condition, you may be eligible for disability benefits. The SSD program pays monthly cash benefits to disabled workers and their families. SSI is a more limited benefit program for people with little or no income and only modest resources. The federal SSI benefit is $733 per month in 2016. Many states provide a small supplemental amount. Most SSI recipients also receive Medicare, which covers hospital and doctor bills.
When deciding whether you are disabled, the first thing SSA looks at is whether your condition prevents you from engaging in substantial gainful activity. If your condition is so severe, it will almost always meet the SSA definition of disability. Then SSA examines whether you have the ability to do other types of work.
SSA must also consider your age, education and past work experience. If you are older, SSA has special rules for determining your functional capacity.
SSA will review your disability status every three to five years. The review is called a continuing disability reviews (CDR). It is important to have your physician(s) submit an opinion report to SSA before your CDR. The best report will explain your symptoms and how they affect your ability to perform work-related activities.
Retirement
Generally, your Social Security benefits are based on your earnings in covered employment. When you qualify for retirement benefits, we determine how much you will get based on your average monthly earnings during the base years for your claim. This is determined by using a formula in the Social Security Act.
We may require documents to verify your identity and eligibility for benefits. We usually accept originals or copies certified by the agency that has the original. For example, we might require a birth certificate, marriage license, bank statement, W-2 forms or tax return, deeds and other official papers.
You can begin receiving your retirement benefits at age 62 with 30 or more years of credited service. However, your benefit amount will be permanently reduced if you take it before reaching full retirement age.
Many State and local government employees are also covered by public pensions. In these cases, we use different rules to determine how your retirement and disability benefits are computed. These rules include the Windfall Elimination Provision and the Government Pension Offset.
You can designate someone to manage your benefits if you are unable to manage them yourself. We call this advance designation. You can choose up to three people to serve as your representative payees. You can also authorize us to pay your benefits to the person you named.