In the United States the term social security refers to specific programs carried out under provisions of the Social Security Act of 1935 and its amendments. International use of the term is somewhat broader, though the meaning may vary from one nation to another. It refers to all measures established by legislation to maintain individual or family income at certain levels, to assure income if employment is lost, and to provide a great number of benefits covered by other programs in the United States. These benefits may include maternity payments, cash for medical needs, legal aid, compensation for crop failure, and funeral expenses.

OASDI.

Officially entitled Old Age, Survivors, and Disability Insurance (OASDI), the Social Security program was enacted in 1935 during the Great Depression to provide retirement income for workers. Most types of workers are covered by OASDI. It does not include some federal civilian workers, however, who are covered by a federal retirement system.

At the beginning Social Security was intended to be operated as an insurance system—people would pay a fraction of their salaries into a fund that would accumulate interest. When the worker retired, the principal and the added interest were to be used to pay monthly benefits.

After four years the notion of an insurance fund was scrapped in favor of the present pay-as-you-go arrangement. Benefits paid to today's retirees come from payments made by today's workers. These payments are in the form of a payroll tax based on incomes up to a certain level. In 1937 the level was 3,000 dollars; 50 years later it had been raised to 42,000 dollars. The 1937 payroll tax was 1 percent for employers and employees. In 1987 the tax had risen to 5.7 percent for each.

Since 1935 the Social Security program has been considerably broadened. It was originally intended only to provide income to workers when they reached age 65. The amendments of 1939 included benefits to dependents and survivors of retired workers. These benefits are, strictly speaking, welfare payments because they do not depend on prior work experience. In 1972 another welfare program called Supplemental Security Income was added that provides a minimum income for the disabled and the aged.

Social Security payments to retirees depend primarily on their work history. The government calculates a worker's average indexed monthly earnings (AIME), a figure that represents the average wages paid over most of a worker's career. There is a wage ceiling beyond which the average is not computed. AIME is then used in a formula to calculate a retiree's primary insurance amount, or how much the individual receives each month. The maximum monthly benefit allowed in 1987 was $788.20.

Workers may retire at age 62 and collect benefits, but there is a 20 percent reduction in the amount. For someone who delays retirement until age 66 or later, there is a slight increase in benefits. Someone who retires and receives benefits may also work for wages, but the amount earned is subject to an earnings test. If the earnings are too high, benefits are reduced.

Social Security amendments passed in 1983 provide for an increase in the retirement age by two months per year, beginning in 2005, until it reaches age 66 in 2009. From 2022 until 2027 the retirement age will increase gradually to 67. By then benefits for those who retire at 62 will be reduced by 30 percent.

Benefits have been increased over the years to reflect increases in the cost of living. Beginning in 1983 the annual cost-of-living adjustment (COLA) was postponed from July to January to save billions of dollars. COLAs, based on the consumer price index, were lowered in 1977 and 1983 because of changes in the way increases were calculated.

Other programs.

Unemployment insurance was also established in 1935. Although financed in great part by the federal government, each unemployment plan is operated by the different states. The length of a benefit period is 26 weeks in most states. Employers pay the entire cost of unemployment through a payroll tax. The Medicare program was enacted in 1965 and covers nearly the whole population above age 65. Because it is administered by the federal government, eligibility standards are the same in all states. The program has two parts: hospital insurance (HI) and supplemental medical insurance (SMI). HI covers 90 days in the hospital per year and up to 100 days of care in a nursing home. In cases of lengthy illnesses Medicare is of little help. SMI pays for physicians' fees and other medical services outside the hospital.

Medicare's HI is financed by a payroll tax on current workers. SMI is financed from general revenues. Those who receive benefits also must pay a deductible for each hospital stay as well as some portion of costs above the deductible. A catastrophic health insurance plan was enacted in 1988 for Medicare recipients and was financed by increases in premiums. Because Medicare does not pay for all medical expenses, most recipients also carry private group-insurance coverage.

Black lung, a form of pneumoconiosis, is a disease that afflicts mainly coal miners. Black-lung disability benefits were started by Congress in 1969. The program was originally managed by the Social Security Administration, but it was transferred to the Department of Labor in 1973. The benefits are financed by an excise tax on coal and by general tax revenues.