In definition, a social insurance is a government-supported program that provides benefits and assistance to its citizens of a particular social standing. This means that a social insurance program has eligibility requirements that are defined by specific qualifications set by a bill or law.
A social insurance program’s source of funds may come from taxes or the premiums paid by—or in some instances, paid for—eligible participants but other sources of funding are also available. Since there are just select citizens who can benefit from social insurance, contributions are compulsory. However, beneficiaries do not view it as an obligation but a rewarding exchange, especially since these types of programs are often heavily subsidized.
One of the goals of a social insurance program is to prevent a population from falling to the heaviest burden of poverty and most importantly, to provide assistance during medical or financial emergencies. As a type of insurance, it is a device that offers compensation and comfort from the losses during such emergencies.
The most common form of compensation is in the form of healthcare assistance in which a network of healthcare professionals and institutions are accessible to eligible individuals, depending on the type of health care plan that they have availed. In return, the government makes sure that these health care providers are well compensated for their services.
In the United States, there are several social insurance programs that take care of qualified citizens. One example is the joint state and federal program, Medicaid, and another form social insurance service includes unemployment compensation. In Japan, a country known for its old population, has a special social insurance program for people between 40 to 65 years old, called, the Nursing Insurance.