Israel: Private medical insurance reforms

Employer Action Code: Act

Most Israelis are covered under National Health Insurance (NHI) for a standard basket of medical services, including hospitalization, pharmaceuticals, and general and specialized medical care. Residents must register with one of four health funds (Clalit, Leumit, Maccabi or Meuhedet), which also offer supplemental coverage options for members. In recent years, however, the sale of private medical insurance (PMI) has increased sharply in response to strong consumer interest in medical treatments, drugs and specialized surgery not covered by NHI or supplemental coverages. This in turn has resulted in an increasing number of employers offering PMI. In response, the Capital Market, Insurance and Savings Authority (CMISA) has approved reforms to help consumers make informed decisions on PMI by standardizing coverage and providing information and tools to compare PMI policies.

Key details

• For all individual and group PMI policies that are concluded or renewed on or after May 1, 2023, insurers will be required to offer a basic (tier 1) policy covering transplants, surgeries, specialized treatments abroad and drugs not covered by NHI. Up to four additional coverage tiers can be offered, as follows:
• Tier 2: Private surgery in Israel, with three options: (a) cover for a certain amount toward surgery; (b) cover with a deductible of 5,000 shekels; or (c) cover from the first shekel paid by the insured
• Tier 3: Extensions of policy coverage for tiers 1, 2 or 5
• Tier 4: Outpatient care, including for consultations, medical diagnoses and investigations, home hospitalization, treatments with advanced technologies and medical devices, and any medical care following major surgery or critical illness
• Tier 5: Coverage for critical illness
• The insurer may give discounts on the premiums, but the discount must be at a fixed rate for a period of at least 10 years.
• The CMISA will launch an online tool to provide individuals with information on their existing insurance portfolio and the premium paid for each of the coverages. The tool will allow insureds to compare coverages and premiums from the different insurers operating in the market.

Employer implications

Of companies surveyed by WTW, 45% offer some level of supplemental PMI for most employees, typically covering surgery and outpatient care for employees and dependent family members. Employer-paid premiums for PMI are taxable as a benefit-in-kind to employees. Employers should review their PMI policies (if any) to ensure they are compliant with the new legislation.