the different kinds of health insurance in Israel
The first time I was offered to buy health insurance in Israel, I pushed it aside. Isn’t everyone covered for everything here? Well, kind of, but not exactly. This post seeks to explain the different levels of insurance in the country and what kind of coverage each layer provides.
Level One: Bituach Leumi (through your Kupat Cholim): Thank God, Israel is a first rate western country that provides an extraordinary level of medical care for all of its citizens. If an emergency comes up, you can go to the hospital and pay nothing. When you need to see a doctor, you can just sign up online and the cost is very small co-pay. Most medicines are subsidized, as are surgeries and other treatments. But there are still some things that aren’t covered. Instead, they are covered by the next two layers:
Level Two: Additional Health Insurance through Kuppat Cholim: If you have something like Magen Zahav of Meuhedet Adif, you have what is called shaban (שב”ן – שירותי בריאות נוספים). Shaban covers you for additional medicines that affect quality of life (ie treating a kidney stones in a way that hurts much less). Shaban cannot offer any additional protection for anything that can save your life. For that, you’ll have to turn to…
Level Three: Private Health Insurance: Almost all the insurance companies in Israel (not kuppot cholim) offer private health insurance. There are usually three levels: The lowest level of this insurance covers you for a certain amount towards transplants and surgeries abroad in the case of emergency. The next level offers a slightly higher level that covers a wider range of emergencies not covered by kupat cholim, as well as certain quality of life treatments as well. This level is usually called something like mashlim shaban – since it complements (להשלים) the insurance offered by the shaban – where the shaban pays for a part, the private insurance picks up the rest of the tab. The highest level covers a large plethora of emergencies and illnesses and pays you irrespective of whatever is covered by kupat cholim and the shaban (in fact, sometimes it will pay you extra for having gone through something, even if the shaban paid for it as well). Just to be clear, while almost all insurance company have the three kinds of programs above laid out above, there are variations; some cover more of X, some exclude Y, but the structure still holds.
In addition to the basic insurance laid out above, there are several kinds of “riders” or mini-policies which you can stick on your medical policy. Below is an outline of the five most common types and which ones I think are worthwhile:
1) Ambulatory – this covers preventative medicine, including check-ups, CTs and MRI. Of all the riders, I consider this to be the most worthwhile. It does cost a bit more, it does not cost nearly as much as…
2) Alternative medicines – if you’re a naturalist or hippy, go for it. If not, you can skip it. Of all the riders, this is usually one of the most expensive (because the client will probably use it for every sickness).
3) Personal doctor – this means that if you are suffering an illness, you have a personal case file and a doctor from the insurance company who monitors the progress so you know where you stand day or night. Some people consider this worthwhile, while others do not. It is a fairly inexpensive rider.
4) Expedited medicine – this rider is a hypochondriac’s dream. In the event of something wrong, you get to go to some facility or specific hospital where a team headed by someone like House MD finds what’s wrong with you and gets back to you within a few days. This rider isn’t so expensive, but most people opt to skip it.
5) A lump sum in case of contracting a specific kind of sickness (ie NIS 100,000 in case of cancer). The cost depends on how much you want the sum to be. When opting for this, and I recommend you do, opt for a sum that will allow you to get yourself and your family in order as the chaos of a sickness begins. For example, NIS 100,000 is a good amount for making sure that you are covered until disability insurance kicks in and for your family to adjust as you go through a crisis. To be clear, this money will not cover the cost of treatments abroad, as they usually cost much more than what is provided by these policies; you need to make sure the insurance covers the medical need and that this ride only covers the transition period for you and your family. If you’re wondering, this is a kind of teunot ishiyot – personal injury – insurance. In fact, the reason I am very critical of personal injury insurance generally (see last post) is that I think it should be bought in a policy like this rather than as a standalone. Buying it with this puts it in the specific context which helps the client choose the proper coverage he or she needs and doesn’t buy any unnecessary insurance.
There are dozens of other riders. Some are simple add ons, like a rider that provides a personal doctor for cancer, or a rider that ensures that all of your medical files are on a disc-on-key for immediate use when going to the hospital. There are also elaborate riders such as one that pay for a TV in the hospital, allows the sick person to order take away once a day, have his or her spouse stay at a nearby hotel and even pay for a temporary secretary to reschedule all of the person’s meeting while he or she is in the hospital. Every insurance company has its own specific riders and can choose to only allow certain riders with certain policies.
A final word on this subject. Some of you have the option of opting for additional health coverage through your work. This is usually a great idea and the cheapest way to get a good policy at a fraction of the price. A group policy includes at least 50 people at a single workplace – so you can’t just make a group out of you and your neighbours. The only downside to a group insurance policy is that you can’t add any riders that aren’t in it – you either take or leave the package.
If you have any questions about the various policies or are interested in getting some insurance for your family or a group policy for your business, feel free to contact me at jonnydegani@gmail.com.
Seudi (long term care) and Teunot Ishiyot (personal injury)
If I were to die tomorrow, my family would suffer financially; it is therefore imperative that I ensure that my salary could be replaced and my family could continue to live the kind of life we live today. But if I were disabled, things would be much tougher. Not only would my family have to replace my salary, but they would have to pay more to have someone take care of me. This is where seudi insurance comes in.
A person becomes “seudi” (in need of long term care) in one of three ways:
1 – A person has a mental affliction (ie alzheimers)
2 – A person cannot control his or her ability to go to the bathroom, plus he or she cannot do one of the following five things: (a) eat and drink (b) get up and lay down (c) be mobile (d) shower and (e) dress and undress
3 – A person cannot do three of the following five things: (a) eat and drink (b) get up and lay down (c) be mobile (d) shower and (e) dress and undress
The insurance guarantees that if you qualify as seudi, you’ll get a certain amount of money (ie NIS 5,000) every month for 3 years, 5 years or life (FYI like disability insurance, this usually kicks in after a few months). I personally do not understand why anyone would buy it for 3 or 5 years; if you’re disabled as outlined above, you need a caretaker for life.
Some of you are probably already saying “hey, don’t I have that from my Kupat Cholim?” Well, yes and no. Kupat Cholim offers its members to sign up for a collective policy with a different insurance company, which keeps the person insured for 5 years and insures the member in case of disability above for payments for 5 years. Due to a change in the law, this is the last year that this will be offered. As it stands, once your collective seudi ends (either through kupat cholim or at work), you will not be able to continue it unless you move to a private policy.
The other option is to buy this insurance privately. And here there are two options. You can choose to buy it at a rate that will change every year (start out cheaper and pay more as you age) or buy it at a fixed rate (that only rises with the CPI, not due to your age). The fixed rate also allows you to have a reserve amount set up, so if you stop paying in one day, you’ll still be covered, but not as much. For example, if you’ve been paying in from ages 30 to 50 and then stop paying, but get injured at 51, you’ll still be covered, but instead of getting NIS 5,000 a month, you’d get NIS 4,000 (this is an example, not exact).
If you have the kupat cholim policy, you can buy a private policy that complements it. For example, kupat cholim will pay you for 5 years; you can buy a policy that pays you every month for life after 5 years.
A similar insurance with very important differences is teunot ishiyot.
Teunot Ishiyot offers the insured a sum of money in the case of an accident. There are five types: K1: a certain amount of money for death from an accident (from an accident means within 12 months). K2 allows for the sum in case of disability as well. K3 gives a weekly amount for disability for up to 2 years. K4 expands accident to include a particular list of sicknesses (ie cancer). K5 expands the list to include all illnesses unless stated otherwise (ie all illnesses except Lou Gherig’s Disease.)
Personally, I don’t see why I’d need to insure myself in the case of an accident any more than in the case of any other kind of death. Does my family suffer less financially if I drop dead than if I get hit by a car? And the same goes for disability and sickness (I’ll get to the other kinds of health care soon for extenuating circumstances).
Those who sell this will tell you that that this insurance offers you a big payoff in the case of an accident and illness, which you may like. But insurance isn’t roulette; insurance is about covering you in the case of financial threat; you shouldn’t be playing it to hit the lottery as you, God forbid, get cancer. There may be some cases when this is necessary, but your agent better have a very good reason specific to your case.
The primary advantage this insurance offers over others is that unlike seudi and disability, which generally carry a three month waiting period, this insurance kicks in after 7 days (14 if only K1 and K2). So in short, if you have three months expenses on hand (which is an important goal), then you can save money and skip this insurance. If not, then it may be worth to buy this insurance until you compile the money.
In summary, this insurance isn’t like health, life, disability or seudi. This is the one kind where you really have to look with a good eye and ask yourself if you need this kind of coverage. For many people, this coverage is superfluous and sold in place of seudi, which provides support the real support needed in the case of a long term disaster. For others, particularly those without any savings, this may be helpful.
Life and Disability Insurance
A while ago, I posted about the insurance in your pension, discussing how much insurance you’re already paying for, and therefore do not need to purchase. In this post I plan to review the common misconceptions that people have about insurance and what is and is not necessary to buy in addition to the insurance in your pension:
Life insurance: Before I even discuss how much life insurance you need, one thing must be made clear. Life insurance allows the insured to take care of his dependents in the case of his or her demise: no dependents no need for life insurance. If you have no children, parent, spouse, sibling etc. that would suffer financially in the event of your death, there is no need for insurance. If you set up your pension correctly, you should have your spouse getting 60% of your salary and each child getting 20% until age 21 or 18. You only need to purchase additional life insurance if this will not be enough. Similarly, if you do not make a full time salary (for example, a housewife), then you would need to get life insurance. I want to stress this, because most people think the opposite is true. If Dad makes the bucks and Mom stays at home with the kids – Dad doesn’t need additional life insurance but Mom does.
When you buy life insurance, you usually buy a set amount (ie 500,000) that the beneficiaries will receive upon death. The best way to decide how much you need it to purchase insurance for the amount of money you’re going to need for 10 years. For example, let’s say a housewife allows the kids not to be in tzaharon (saving 2,000 a month) and watches the kids while the husband is at work and prepares dinner (another 5,000 a month). This means that you’d need 7,000 x 12 x 10 = 840,000 to replace her in the event of death. I obviously oversimplified this, but as a general rule, writing out the cash flow you would need will help you determine how much you need to buy.
If a spouse works part time or only pays in a pension from some of his salary, then insurance should be bought to cover the rest. For example, let’s say I make 10,000 but only pay a pension on 6,000 (the rest is a bonus that I get every month). Or let’s say I only work a 60% job and earn 6,000. Either way, I’d need to get additional insurance for 4,000 x 12 x 10 = 600,000.
Disability: Your insurance can cover up to 75% of your salary, which is probably enough to get by. Like life insurance, your pension should cover this if you set it up right, and like life insurance, it is the stay at home spouse who will need an arrangement made to cover her in the case of disability. When setting this up in your pension it is called nechut (נכות). When purchasing it on your own it is called ovdan kosher avodah (it is also called that if you have bituach menhalim). Usually, this insurance only kicks in after three months, so you should still have three months expenses put away in case something happens.
In my next post I’ll cover probably the most important insurance you don’t have, seudi, and the much less useful that too many Israelis are sold, teunot ishiyot.
transferring money from abroad using IsraTransfer
Over the past few years I have gotten many mails with questions about salaries from abroad. While I can help with the pension and budgeting part, more help is needed, specifically when moving the foreign currency to Israel and not getting ripped off on the exchange rate. I was thrilled to see IsraTransfer ‘s service and to this day I have only heard positive customer feedback. I asked the people at IsraTransfer to explain their service on this blog for whomever has need of such a service.
Have you been wondering why the bank charges so much in fees when you want to send money over from back home? Well, the answer is, because they can. Don’t worry, we’re here to help!
IsraTransfer is Israel’s premier wire transfer specialist for individuals and businesses. We offer various services to fit your needs. IsraTransfer is also the exclusive operator of the AACI Foreign Exchange Program which offers the most secure transfer alternative to your bank.
The Service
Our basic service is simple: A client sends us funds (bank transfer only) in a foreign currency (i.e. USD, GBP, EUR, etc), IsraTransfer converts the funds into Shekels with the trading desk of the bank at a wholesale rate, and then send the Shekels on to the client’s bank account. No receiving fees, no converting fees, and the best rates.
For Individuals
The most prominent reasons individuals transfer money into Israel are for property purchase and Aliyah. While most transfers for these purposes are simple money-in money-out operations, IsraTransfer can also help you with strategic transfer planning to ensure you are getting the most out of your foreign exchange.
One of the other main reasons for making transfers is fixed income such as Social Security, pension, or other investments. This is an area we deal with frequently and we can help maximize your payments.
If you are planning on making Aliyah, buying a home in Israel, or simply need to make regular payments into Israel - contact us!
For Business
There are a few services we offer for businesses that work internationally. Some companies have the need to transfer money in between the organization, such as for payroll and billing, other organizations do business overseas requiring payments for goods or services, and some businesses collect money in Israel for services.
We offer companies the same basic transfer setup for regular payments, but we also have risk solutions available for companies that are exposed to the fast-moving currency market. Hedging offerings include Forward Contracts and Currency Options. IsraTransfer can help your business with the right solution to fit your needs.
IsraTransfer’s team has over 20 years combined experience in the foreign exchange market and we have a deep understanding the global currency market. Please feel free to contact us at any time by phone 074-701-8887 or email info@isratransfer.com. You can also read our great interviews and article on our blog.
We would love to hear your thoughts, questions, and issues on money transfers and currency exchange. Please leave us a comment below!
Pensions Part Seven: How to Choose a Pension Fund
You’re almost there. You already know what you’re paying into the system and when you’ll begin paying. You know the different products on the market and how the different products approach risk. You know how to compare returns from the various funds and understand the various fee structures. You even know the kind of insurance involved and how to decide what is right for you. Now we’re going to put it all together and help you choose the right pension for you.
The first step to choosing a pension is to determine what you need. For 95% of workers, this is going to be a keren pensia mekifa but there are exceptions – namely those who make more than twice the average wage and need to pay into an additional fund, and some with insurance complications may need bituach menahalim. Once you know what kind of fund you want, the next step is to choose the investment strategy and possible funds. Again, for most people, this means going to pensianet, and choosing the best three to five funds based on well they did for their three year and five year average return as well as their sharpe. If you also want to choose a non-general fund (a Chilean or ikea fund) that is okay, but keep add three general funds to your list of possibilities.
The next thing you do is contact either your insurance agent or the companies directly and see how good a deal you can get on fees (go to http://ozar.mof.gov.il/hon/bituah/address.htm to see a list of all the companies and their phone numbers). Each time a person tells you a number take down his name and contact information; you may need to call him back. As you call each provider, try to bargain him or her down on the charges. Pit one against the other and call back a provider and tell him that company X will only charge you Y and ask if his company can beat it. After a while, you’ll find that one company has offered you less in for deposits (hafkadot) and one will offer you less for accumulation (neches). Compare the fees and the funds and choose whichever option suits you best.
The next thing you’re going to need to do is set up your insurance within the pension. Make sure you choose the correct insurance option so that you’re not throwing out your money, nor under-insured in case of a catastrophe. You will most likely need to buy additional seudi (long term disability) insurance to complement this insurance (I will have an entire post explaining seudi coming soon).
If you already have a pension, make sure when opening a pension that you are continuing the one you already have (ask for shmirah al haretzefI). This will ensure that you don’t have another 5 year period of excluding preexisting conditions on your insurance. You should also ask for the appropriate paperwork in order to move all your money from your old pension to your new one.
I know the process can be intimidating, but we’re talking about the biggest investment of your life. A few days of work now will save you hundreds of thousands of shekels in the future.
If you have any questions or are looking for help choosing a pension, please call me at 054-316-3211 or e-mail me at jonnydegani@gmail.com. I work with Mivtachim, Klal, Harel, Midgal, and Phoenix, who collectively make up 97% of the pension market. I also have some connections to people in the smaller companies as well if you prefer them. I would be happy to help you choose and set up a pension absolutely free.
The guide to your pension in Israel (keren pensia and bituach menahalim)
Part One: Paying into your Pension – Part Two: The Five Types of Pension Plans – Part Three: How your Money is Invested – Part Four: Risk and Returns – Part Five: Understanding and Avoiding Fees – Part Six: The Insurance in your Pension – Part Seven: How to Choose a Pension Fund
Pensions Part Six: The Insurance in Your Pension
Without a doubt, the subject that about which most I have encountered are the least knowledgeable is the insurance part of the pension. This is a huge shame because not only does ignorance of this subject lead to wasting thousands of shekels on unnecessary insurance, but it can also lead to people not having the right kind of insurance and suffering needlessly in the case of an accident.
There are three types of ways someone can collect money from his or her keren pensia:
(1) By becoming disabled (פנסיה נכות)
(2) By dying (פנסיה שארים)
(3) By becoming of pension age (called פנסיה זקנה)
Disability: Pensia Nechut (פנסיה נכות): If, God forbid, someone paying into a keren pensia meikifa becomes disabled before reaching retirement age, he or she is eligible to collect pensia nechut, or disability. In this case the person receives up to 75% of his or her salary every month, depending on how the insurance is set up. The money to pay for this insurance comes from the money saved in the pension fund, which means that you don’t have to pay extra for it, but it gets deducted from the amount you’re saving for retirement (from the תגמולים, not the פיצויים, which can never be touched.). The good thing about this is that it comes at the cheapest possible rate because no agent is getting paid for this (they get paid based on the fees of the pension, not the amount taken out for insurance). It is also of note that with some exceptions, most people are not covered for disability due to preexisting conditions for the first 5 years of paying into a pension.
Death: Pensia Shearim (פנסיה שארים): If, God forbid, someone paying into a keren pensia meikifa dies before retirement age, his or her spouse will continue to receive a portion of the deceased’s income (usually 60%) for the rest of her life (even if she remarries). In addition, each child gets a portion of the salary (up to 20%) until the child reaches 21. Like pensia nechut, the money for this insurance is very cheap and is deducted from your savings for retirement. If you are single or without children, you need to inform your pension company about this and fill out a form every 2 years stating that they should not deduct for insurance for a spouse or children (you need to do it every 2 years because they are afraid that you’ll forget to tell them when you get married, so the insurance goes back to the default every 2 years).
When you sign up for your pension, you choose what level of insurance you’ll have with your pension. If you didn’t choose, then you were given the default. If you’re unsure what you have, the amount you are covered for nechut and shearim is listed on your quarterly and annual reports from your pension. Alternatively, you can call your agent or pension company and ask what you have. If you find out that you are not insured correctly, ask the pension company to correct this as soon as possible. Remember, this insurance may not cost any additional money, but it is up to you to make sure that the company is giving you the right level of insurance. All you have to do is call and ask for the proper amount of insurance. As always, put everything in writing (send an e-mail after the conversation summarizing it) so that you have a record in case something happens.
Pensia Zikna (פנסיה זקנה): When one reaches pension age and begins פנסיה זקנה, he or she begins to receive his or her monthly annuity, or gamla (גמלא). Normally, the first 240 gamlaot are guaranteed, so if God forbid the person dies, the heirs will continue to receive the monthly annuity for the first 20 years of the deceased’s retirement. A person can choose to have less guaranteed gamalot in return for a slightly larger annuity. In addition, the retiree can choose how his pension will be continued to be paid once he or she dies. For example, most people have it automatically set up that if the pensioner dies, the spouse of the pensioner will get 60% of the annuity for the rest of his or her life. Again, you can play around with this and get a larger or smaller annuity based on the amount of insurance you are getting with it. This kind of insurance is called she’irai pensioner (שאירי פנסיונר), literally the leftovers of the pensioner.
Some important observations:
(1) Usually, the only people who need additional life insurance are housewives and part time working mothers. Unlike their full time counterparts, these workers will not have their economic contribution to the household covered in the event of their death.
(2) I don’t know why, but the law only allows disability to cover up to 75% of a workers’ salary. The problem with this is that not only does a disabled have to replace his economic contribution to the house, but unlike if her were to God forbid die, being disabled costs money (hiring a caregiver etc.) The best way to complement this insurance is therefore to buy seudi (סיעודי), long term care insurance, which gives a monthly payout in the event of disability
(3) If you collect money from your pension for death (פנסיה שארים), you lose the money you saved for retirement. This usually isn’t a problem because you’d prefer a spouse to get 60% of your salary than the lesser amount for the pension, but this is a huge problem for single parents, who could in some cases chance their kids getting very little (just the payout until they turn 21). In this case, it is advisable to switch to bituach menahalim or choose from among the kranot claliyot until the kids turn 21. After 21, since there is no insurance for the kids to be paid, the kids can split the pension in the event of the death of the parent and it will be worthwhile to return to the lower fees of the keren pensia.
(4) The system I outlined above only applies to a keren pensia meikifa. Alternatively, bituach menahlim allows you to get any kind of insurance you want (that is the good part about it; the bad part is that the fees are insane) and kranot pensia claliyot do not have any insurance.
The job of a good pension analyst or agent is to help you choose the right insurance based on your needs. In my next post I’ll do a quick summary of how to understand the market and choose a pension fund that is right for you.
The guide to your pension in Israel (keren pensia and bituach menahalim)
Part One: Paying into your Pension – Part Two: The Five Types of Pension Plans – Part Three: How your Money is Invested – Part Four: Risk and Returns – Part Five: Understanding and Avoiding Fees – Part Six: The Insurance in your Pension – Part Seven: How to Choose a Pension Fund
Initial Results of Billing Companies Poll
A few weeks ago, I posted up a link to a polldaddy poll I created asking people about different billing companies in Israel. Despite my best efforts including 25 linkedin groups and a front page spot on Janglo, I only got 13 responses. Nonetheless, 14 is better than 0 and I actually found the results to be surprising – so without further ado.
5 of the 14 responses were from people who worked with Sveram. The reviews were mostly lukewarm to cold. While Sveram pays on time and is easy to use, there seem to be issues with customer service.
4 of the 14 responses were for Yeul Sachir. 2 people loved them, one was lukewarm and one hated them. Yeul Sachir is the most Anglo friendly, but some have issues with being paid correctly.
4 of the 14 responses were for Taxpay. This was a shock to me; I didn’t know many Anglos used Taxpay, but according to these responses, they do and they love it. Taxpay had the best feedback with the only criticism being that one person though the system was a bit complicated.
1 of the 14 responses was for Atzmai Sachir giving it a lukewarm to positive review and not much detail.
