social insurance

Social insurance is any government-sponsored program with the following four characteristics:

• the benefits, eligibility requirements and other aspects of the program are defined by statute;
• explicit provision is made to account for the income and expenses (often through a trust fund);
• it is funded by taxes or premiums paid by (or on behalf of) participants (although additional sources of funding may be provided as well); and
• the program serves a defined population, and participation is either compulsory or the program is subsidized heavily enough that most eligible individuals choose to participate.

Social insurance has also been defined as a program where risks are transferred to and pooled by an organization, often governmental, that is legally required to provide certain benefits.