Compulsory public-insurance program that protects against various economic risks (e.g., loss of income due to sickness, old age, or unemployment). Social insurance is considered one type of social security, though the two terms are sometimes used interchangeably. The first compulsory national social-insurance programs were established in Germany under Otto von Bismarck: health insurance in 1883, workers' compensation in 1884, and old-age and disability pensions in 1889. Austria and Hungary soon followed Germany's example. After 1920, social insurance was rapidly adopted throughout Europe and the Western Hemisphere. The U.S. lagged behind until the passage of the Social Security Act in 1935. Social Security in the U.S. now provides retirement benefits, health care for persons over a specific minimum age, and disability insurance. Social-insurance contributions are normally compulsory and may be made by the insured person's employer and the state as well as by the individual. Social insurance is usually self-financing, with contributions being placed in specific funds for that purpose. Seealso unemployment insurance; welfare.
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Despite the use of the word "insurance" in the English translation, Kela is funded directly from taxation, not from insurance premiums. Coverage under the scheme is given to all permanent residents of Finland. Kansaneläkelaitos is literally translated as "Institution for National Pension", reflecting its original function as a source for national retirement allowance.
In May 2008, a Kela e-service apparently disclosed confidential medical insurance information to the wrong client, and subsequently took that service offline.