Most elderly Israelis cannot afford full-time elder care, a new report from the Bank of Israel has found. The report estimated the average cost of full-time care at 9,400 shekels (about $2,500) per month—more than most elderly Israelis have left over from their income after paying for regular expenses.
One of the benefits available to help older Israelis pay for caregiving is long-term care insurance. This insurance primarily consists of two levels: one from the National Insurance Institute, known as Bituach Leumi, and one from Israel’s health maintenance organizations. The compulsory national insurance is funded by automatic deductions from every worker’s salary of 1%-7% of, with additional contributions to the insurance fund paid by the employer.
HMO long-term care insurance offers a monthly payment ranging from 3,200 to 5,000 shekels ($860 to $1,350) for community-based care, and 4,500 to 10,000 shekels ($1,220 to $2,700) for full-time care in an institution, for up to five years. These insurance payments are not dependent on income, but rather on the age at which the individual joins the insurance, with about five million Israelis covered.
Over the past two years, the HMOs’ long-term care insurance policies have faced collapse twice, becoming unprofitable for insurance companies due to the increase in demand for benefits. The solution that was implemented involved reducing benefits, narrowing the conditions for receiving benefits, and increasing premiums. These measures allowed for an extension of the insurance coverage for another two years, but it seems that the insurance companies don’t plan to continue providing them after that.
According to data from the Bank of Israel, policy changes regarding eligibility for long-term care benefits and an increase in the number of people using these have doubled the public expenditure on long-term care benefits within the last decade. These expenditures reached about 0.9% of GDP in 2024, an addition of about 9 billion shekels ($2.4 billion.)
The report estimates that in the absence of further policy changes, public expenditure on long-term care benefits could reach about 1.3% of GDP by 2040. The bank also estimates that the ballooning expenditures seen in HMO insurance programs is also reflected in the growing public expenditure in the long-term care sector of the National Insurance Institute.
“The current crisis requires examining the sustainability of the current models for financing long-term care services and determining eligibility in order to decide on actions to balance the actuarial situation of private group insurances and stabilize the expenditure of the National Insurance Institute,” the Bank of Israel report reads. “For this examination, a gathering of representatives from the relevant professional bodies is required to look into the various issues and propose sustainable solutions that address the cost involved in facilitating the utilization of welfare rights.”
The Bank of Israel recommended that the state take steps to prevent the deterioration of elderly individuals in low-income brackets by increasing HMOs’ efforts to prevent functional decline in old age. This should be done by providing financial incentives to the HMOs and altering the incentive structures of nursing care companies so that they are encouraged to prevent the deterioration of elderly individuals’ conditions. Additionally, the impact of agencies that assist with the utilization of rights should be examined, along with a reevaluation of the eligibility criteria for National Insurance benefits.
The bank avoided recommending a potential national or public long-term care insurance system. It argued that given the broad coverage that already exists for the elderly population in Israel, the potential cancellation of long-term care insurance from HMOs would significantly affect the financing and scope of services.
“Due to the great importance of these insurances, it is crucial to examine the terms of the group long-term care insurance and update them within the next year or two, as stipulated by the regulations of the Capital Market Insurance and Savings Authority,” the report reads, adding that alternatives to long-term care insurance include savings-based models, mandatory or voluntary insurance, or individual or group policies.
Mandatory long-term care insurance through the National Insurance Institute could be expanded as an alternative. But doing so would mean raising taxes, and those who work less would essentially be subsidized by those who work more, the report said.
This article was translated from Hebrew by Lily Sieradzki.
