Which term describes a social program financed in whole or in part by taxation or mandatory contributions by current or future recipients?

• A. Contributory program
• B. Noncontributory program
• C. Indexing
• D. COLAs

Answer: (A)

Contributory programs are those financed by mandatory contributions from workers or from those who will become beneficiaries, typically through payroll taxes. The defining idea is that people pay into the program during their working years (or future contributors pay into it) and those funds are used to pay benefits. This direct link between contributions and benefits is what characterizes a contributory program, with classic examples being Social Security and Medicare in many contexts.

Noncontributory programs, by contrast, rely on general tax revenues and do not require individuals to contribute specifically to receive benefits; they are funded from the broader budget and are often means-tested. Indexing and COLAs, meanwhile, refer to adjusting benefits for inflation, not how the program is funded.