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Insurance Contributions

The National Insurance Institute collects insurance contributions from all residents in accordance with their income and insurance status, and pays benefits to those entitled. In this way, income is transferred from groups which are well off economically to weak and vulnerable groups, and the National Insurance Institutes thereby contributes to a more just distribution of the national income and to a reduction of poverty.

Since January 1, 1995, the National Insurance Institute is responsible for the collection of health insurance contributions under the National Health Insurance Law, and transfers these contributions collected to the various sick funds.

All Israeli residents aged 18 or older must, under law, be covered with the National Insurance Institute, and must pay insurance contributions (except for a married woman who does not work outside her household - as well as for a person who immigrated to Israel and became an Israeli resident for the first time when over age 62 who pays health insurance contributions only). The National Insurance Institute charges fines and linkage to those who do not pay insurance contributions on the date stipulated by law.

This section will be describe the different types of insured; types of benefits for which they are insured; income bases according to which insurance contributions are calculated and insurance contribution rates.

 

National Insurance Contributions

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The proper payment of insurance contributions ensures eligibility for most National Insurance benefits. All Israeli residents aged 18 and older must, under law, be covered with the National Insurance Institute and pay insurance contributions (except for a married woman who is a housewife only and a person who immigrated to Israel and became a resident for the first time when over 62).

Payment of national and health insurance contributions is calculated in accordance with level of work and non-work income of the insured, and also in accordance with the status of the insured:

A salaried worker
A self-employed worker
Unemployed

Health Insurance Contributions

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Under the State Health Insurance Law, As of January 1, 1995, every Israeli resident has health insurance coverage. All Israeli residents aged 18 and over, except for housewives must pay health insurance contributions to the National Insurance Institute together with their national insurance contributions, (although housewives who receive an old-age pension or whose spouse receives an increment to the old-age pension must also pay health insurance contributions).

All insured persons must be registered with one of the country’s health maintenance organizations (HMOs, known also as kupot holim) and may choose which HMO to join. The HMO must provide all insured persons with a standard Health basket as specified by law.

The amount of one's payment of national and health insurance contributions is calculated in accordance with the level of income that the insured person has from his workplace or from other sources, and in accordance with the determined for him:

  • Salaried employee
  • Self-employed person
  • A person who does not work

    Rates and amounts of insurance contributions

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    Methods of reporting and of paying insurance contributions

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    Employers must report on their employees and must pay insurance contributions on their behalf.
    However, self-employed workers, students (including yeshiva students) and non-workers must pay their insurance contributions on their own. 
    Following are the different methods of reporting and of paying insurance contributions:

    Coordination of insurance contributions

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     Under the National Insurance Law, if a worker is employed by several employers or if a person receives early pension from several sources, the secondary employer or pension payer deducts national and health insurance contributions from his income or pension at the full rate. In some cases, the amount of insurance contributions deducted is higher than that required by law.

    In order to prevent over-deduction of insurance contributions, workers employed by several employers and persons receiving early pension from several sources should provide their secondary employer or pension payer with an authorization of the correct deduction rate.

    A worker or early pension recipient from whose income or pension an amount has been deducted which is greater than the required one is entitled to a refund of insurance contributions.

    The following may coordinate their insurance contributions:
          A person working for two employers or more
          An early pension recipient who also works as an employee for one employer or more
         A person receiving an early pension from two or more sources

    On condition that they meet one of the following conditions: 
         Their monthly income from their main employer or primary pension source is below 60% of the average wage, that is, below NIS 5,678 (as of Jan 01, 2016) .
      Their total monthly income from all employers and/or pension sources is higher than the maximum income liable for the payment of insurance contributions: NIS 43,240 (as of Jan 01, 2014) .

    Debt in Insurance Contributions

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    The money that the National Insurance Institute collects as insurance contributions are used to fund benefit payments to all insured. Therefore the NII must assure that all insurance contributions are paid on time.

    Employers who do not pay the insurance contributions for their employees on time are charged a fine as well as linkage differentials under law. In addition, if an employee of such an employer is entitled to a benefit from the NII, the NII may sue the employer for the amount of the benefit.

    Those who are self-employed or do not work who have accumulated a debt in insurance contributions are also charged fines and linkage differentials under law.

    Most important,
    If you have accumulated an insurance contribution debt, it is important that you contact your NII local branch as soon as possible in order to settle your debt, so that it will not continue to increase.

    You can request reduction of fines and linkage differentials and reach an arrangement to pay your debt in convenient installments.  

    Israeli residents traveling abroad

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    An individual legally defined as an Israeli resident, is required to pay national and health insurance contributions to the National Insurance Institute (NII), and is entitled to receive its benefits.

    If you are an Israeli resident who is temporarily living abroad, required to pay national and health contributions even for the period in which he/she lived abroad. Delays in paying health insurance contributions for the period abroad may revoke your eligibility to receive medical services for a few months, so it is important to keep up to date with payments.

    • An Israeli resident living abroad who has no income – must pay the minimum insurance contributions that are stipulated by law.
    • If he/she has income abroad (from working for an employer who is not Israeli) – insurance contributions must be paid according to the Income Tax assessment.
      Rate of insurance contributions: 5% health insurance and 7% national insurance. If the source of the income in the assessment is income from work, and national insurance has already been paid from it to a country with which Israel has signed a social security convention – only health insurance fees will require payment.
    • If you are an Israeli resident and you were sent to work abroad by your Israeli employer, your Israeli employer is responsible for payment and must deduct your insurance contributions from your salary.
    • An Israeli resident who works for a foreign employer in a country that is a signatory to a social security convention with Israel, and who pays social insurance contributions in that country is exempt from payment of national insurance contributions to the NII, and is required to pay only health insurance contributions.

    If you have been residing abroad with your family for a lengthy period of time or if you have immigrated to another country and are in effect no longer an Israeli resident, you must notify the NII so that the possibility of the termination of your NII coverage can be looked into.

    Returning residents

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    Employers

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    Under Israeli law, all employers must regularly file a report with the National Insurance Institute concerning their employees and must pay national and health insurance contributions to the NII for them. Under law, employers who fail to file a report or to pay these contributions by the prescribed deadline will be subject to fines and linkage. The NII is entitled to launch legal action against them and to demand that they reimburse the NII for the allowances that it has paid or will pay in the future to their employees.

    Payer of Early Pension

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    Under law one must report those employees who receive early pension payments. One must also pay national and health insurance contributions for them.

    A failure to report or to pay the insurance contributions at the legal date will lead to debiting the pension payer's account with fines and indexation under law.

    Representatives

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    Housekeepers and employers of domestic workers

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    Employees

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    Self-Employed Person

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    Non-Workers

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    Students

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    Yeshiva students

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    Enforcement and implementation

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    All insured persons and employers must make insurance payments on the legally determined date.
    If insured persons and employers do not pay their insurance debt, the NII is obliged to take the legal steps to collect it.
    According to the National Insurance Law, NII employees who have received the necessary approval and whose names have been published in the Government Gazette may initiate enforcement an implementation proceedings.
    Paragraph 367 of the National Insurance Law states that the 'tax ordinance' (collection) applies to insurance payments as though they were taxes.
    According to the ordinance, NII workers who are authorised to do so, may initiate 2 types of actions as a means to collect insurance payments:

    Appeal to the Tax Committee about Determining Insurance Contributions

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    In cases where the NII collections official has determined what sum of insurance contributions insurees must pay, and the latter do not concur with the determination, they may appeal to a Tax Committee.

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