FIN 512 Lecture Notes - Lecture 7: Social Insurance
Social insurance characteristics:
- 1) compulsory
o All employers and employees must participate unless the coverage is provided in
another form in the organization
- 2) Provide Benefits
o ceiling on contributions and benefits
- 3) benefits are prescribed by law
- 4) benefits are means-tested
o People receive the benefit because they qualify for it, not because they need it
- 5) Contributions made by employees, employers or both
- 6) benefits are funded
o Ex. Not out of general revenue
4 Underlying Principles of Worker’s Comp.
1) Employers bear the direct cost of compensations – employers pay premiums based on payroll,
job classification, history of accidents
2) Workers give up right to sue
3) Negligence and fault for the cause of injury are not considered except as premiums are
increased to reflect experience
4) System administered by a neutral agency
Objectives of EI
- Provide income during short-term involuntary unemployment
- help unemployed workers find jobs
- help stabilize the economy while maintaining purchase power
Regular benefits
- paid for 14-15 weeks if they loss their job for no fault of their own
- eligible if they are out of work for 7 consecutive days
- in the qualifying period, the person has worked the number of insurable hours
- the qualifying period is the shorter of 1) the 52 weeks before the start of the claim 2) the period
since the start of the previous claim
Cpp Disability Benefits
- if under 65 and cannot work any job
- dependents of disabled also receive money
- at 65, disability benefits end, retirement starts
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