NATIONAL INSURANCE INSTITUTE

RESEARCH AND PLANNING ADMINISTRATION

Summary of evelopments and Trends in Social Security, 1994

Submitted to the Secretariat of the ISSA, GENEVA

May 1995

INTRODUCTION

The State of Israel is today in the midst of a complex, unprecedented peace process, with all its economic implications. At the same time, Israel is still faced with the challenge of absorbing the waves of immigrants which have been reaching its shores in recent years, with the economic burden entailed by this task. During the last five years, more than 600,000 persons immigrated to Israel, mostly from the former Soviet Union. Presently immigrants are arriving at a pace of about 80,000 a year. These immigrants today constitute over 10% of Israel’s population.

All this is occurring against the background of a steady increase in the socioeconomic gaps in Israeli society. In 1994, therefore, the National Insurance Institute (NII) continued its active role as the main instrument for reducing economic gaps not only among the new immigrants, but particularly among the veterans of Israeli society. This goal was worked towards by means of the following major steps:

– formulating a program to combat poverty by increasing the incomes of the population groups having a high incidence of poverty, by means of national insurance benefits;

– reforming the system of collection of insurance contributions;

– reforming the health insurance system;

– introducing changes and amendments in legislation, in order to correct distortions in the system and to improve the condition of the weak population groups.

For over two decades, the National Insurance Institute has been reporting on the scope of poverty in Israel in an annual report, which, each time it is issued, announces an increase in the percentage of the poor out of the total population. In 1993, the NII developed a program which went beyond statistical reporting on poverty, by suggesting specific intervention measures aimed at reducing the dimensions of poverty. This program was authorized by the government and on July 19, 1994, the Law to Reduce the Scope of Poverty and Income Gaps was passed by the Knesset (Israeli Parliament). This law amended various existing laws, including a number of amendments to the National Insurance Law, with the aim of reducing the scope of poverty and income gaps by means of the benefits provided to the population whose main source of subsistence is the NII benefits. Specifically, the various amendments increased the rates of old-age and survivors’ pensions, the income support benefit paid to families and the child allowances paid to large families. Taken together, the various measures raised the incomes of about 50,000 families (out of a total of about 174,000 poor families) to above the poverty line.

Furthermore, under the above law, a reform in the system of collection of insurance contributions was authorized, to come into effect in January 1995 (included in the chapter, "Changes in Progress and Future Plans"). In the framework of this reform, income components formerly exempt from insurance contributions were included in the income liable for these contributions. In addition, reduced rates of insurance contributions were introduced on income up to half the average wage, and the income ceiling for payment of contributions was raised from three to four times the average wage. These measures led to more progressiveness in the system of collection of insurance contributions.

The comprehensive national Health Insurance Law recently passed by the Knesset is to come into effect in January 1, 1995 (included in the chapter, "Changes in Progress and Future Plans"). For the first time, the responsibility of the State to provide medical services and all health requirements to all citizens is anchored in law. The services are provided by means of the same sick funds operating before the enactment of the law, and every citizen has the right to be insured by the sick fund of his choice. The new law also guarantees the health insurance of hundreds of thousands of citizens (about 5 % of all citizens of Israel) who were previously not insured by any of the sick funds.

Under the new health program, the National Insurance Institute has been delegated as the body responsible for collecting health insurance contributions and distributing them among the various sick funds, according to a capitation system. The decision to delegate this task to the NII was in keeping with the view of the health sector as part of the overall network of social security for the country’s citizens. It should be noted that due to special efforts made by the NII, the health insurance contributions paid by the economically weak population were kept to a minimum.

A wide range of significant changes came into effect in Mobility benefits, improving conditions for disabled persons limited in mobility, both regarding the mobility allowance (as of August 1994) and regarding the standing loan (as of February 1995). These changes are detailed in the chapter on Mobility Insurance and in the chapter on "Changes in Progress and Future Plans". A number of improvements were introduced, too, in the Hostile Action Casualties branch.

The scope of population entitled to national insurance benefits was widened in 1994 in a number of ways:

– by broadening the definitions of terms in wide use in national insurance: child (a general definition in the National Insurance law, used in a number of insurance branches) and sole parent (used in Income Support);

– by expanding age groups eligible for benefits: sole-parent families with children aged 6-14 (not only 6-1 1, as was the case before) receive a study grant for children and women up to age 65 (instead of only up to age 60, as previously) may be eligible for unemployment benefits;

– by repealing certain conditions of eligibility laid down in the law: non-receipt of benefit from the Ministry of Defence is no longer a condition of eligibility for survivors’ pension (under Old-age and Survivors’ Insurance) or for dependents’ pension (under Work Injury Insurance), and receipt of survivors’ or dependents’ pension is no longer a condition of eligibility for vocational rehabilitation for widows/widowers;

– by adding new population groups to those eligible for benefits: AIDS victims under Disability Insurance (and under progress: radiation victims) and widows of hostile action casualties injured in 1948, under Hostile Action Casualties Insurance.

Further, in 1994, the rates of the following benefits were increased

(apart from the increases arising from the Law to Reduce the Scope of Poverty and Income Gaps): the rate of increment to survivors’ pension paid to widows/widowers with more than two children (who now receive increment for all children, rather than for the first two children only, as was the case previously) and the rate of the maternity allowance, which was significantly increased from 75% to 100% of wages.

A number of changes in 1994 came about as a result of court judgements or administrative decisions, rather than through the legislative process. Such changes include the lengthening of the period of time permitted up to the submission of claim for old-age and survivors’ pension and for risk pregnancy benefit.

As in previous years, in 1994 the trend of making criteria for receipt of unemployment allowance more stringent continued: allowance was ruled out for young persons (up to the age of 35) who refuse to accept a low-wage job.

For the first time, this report includes a chapter on Rehabilitation, a department of the National Insurance Institute offering vocational rehabilitation to various population groups.

Aside from the granting of benefits and the provision of vocational rehabilitation, the NII allots a significant share of its budget in developing services for needy groups in the community, notably services for the disabled (such as in the occupational, social and housing areas), long-term care services for the elderly (such as day centers and beds in institutions), and a wide range of demonstration projects which set up services new in content, in method of operation or in target population. These projects included the care of homeless in Tel Aviv-Jaffa, a mobile workshop for pensioners, occupation for the homebound in Kiryat Tivon, an emergency treatment center for children at risk and their parents, an occupational follow-up program for released prisoners, a training program for former drug addicts to qualify them as rehabilitation counselors, a project for the prevention of falls of elderly persons in Beer Sheva, a home occupation project for chronically ill patients and group treatment of victims of sexual abuse.

As in previous reports, this report also includes information on international conventions, both bilateral and multilateral, to which Israel is signatory, along with various Western European countries. Israel is in the process of negotiation with additional countries in order to expand the scope of international cooperation by means of such conventions.

GENERAL

– Persons Learning in a Pre-Military Framework – Amendment No. 81 to the National Insurance Law

On November 9, 1993, The Knesset passed amendment no. 81 to the National Insurance Law, amending article no. 5 to the law, as follows:

The definition of child was expanded to include "persons learning in a pre-military framework of the Israeli Defence Army" (if he is between 18 and 20 years old).

The amendment has implications on benefits granted in the following insurance branches: Old-age and Survivors, General Disability, Income Support and Work Injury.

The amendment is in effect as of November 15, 1993.

OLD-AGE AND SURVIVORS

– Law to Reduce Scope of Poverty and Income Gaps

The Law to Reduce the Scope of Poverty and Income Gaps, in force as of August 1, 1994, aimed at reducing the scope of poverty, inter alia, by increasing the benefits paid under the Income Support Law.

The changes relating to the recipients of old-age and survivors’ pensions are as follows:

a) The rates of benefit for recipients of pension plus income supplement who have children with them were increased (in percentages of the average wage). The increment for each child was increased to 10%, from the previous 5% for recipients of old-age pension, and from the previous 7.5% for recipients of survivors’ pension;

b) The resulting sums of benefit were further increased by 7% for all recipients of old-age and survivors’ pensions who receive income supplement.

The rates of pension plus income supplement to orphans remained the same.

– Gravestones for Solitary Persons

Under a new agreement signed between the NII and the Ministry of Finance under article 200 of the National Insurance Law, the government shall finance the cost of gravestones for solitary persons who passed away and whose graves are unmarked.

The agreement is in effect as of August 1994.

– Amendment No. 93 to the National Insurance Law – Payment of Survivors’ Pension for Children.

Under amendment no. 93, an increment to survivors’ pension is paid to a widow/widower with children, for every one of the children and not only for each of the first two children, as was the case previously.

The amendment changes sections 21(a1) and 21(a2) of the National Insurance Law, which now read as follows:

(a) A widow/widower who has children with her or him shall be paid by the Institute, so long as the children are with her or him, a pension at the rate of 7.5% of the average wage for every one of the children.

(b) Where an insured person has left children and there is no widow/widower entitled to a pension for them, if the children have a parent who does not live permanently abroad, a pension shall be paid at the rate of 10% of the average wage if there is only one child. If there is more than one child, a pension for every one of the children shall be paid at the rate of 7.5% of the average wage.

The amendment is in force as of August 4, 1994.

– Survivor’s Pension and Benefits from Ministry of Defence – Amendment of Article 145 of National Insurance Law.

Amendment no. 92 to the National Insurance Law, passed by the Knesset on July 25, 1994, added a subsection (1a) to article 145, as follows:

" (1a) a benefit paid under article 20a (a) of the Disabled Persons

(Benefits and Rehabilitation) Law – 1959 (Consolidated Version), shall not be considered a benefit for purposes of subsection (a). "

Under this amendment, a widow entitled to and receiving benefit under article 20a(a) of the above-mentioned Disabled Persons Law shall be now entitled to receive, in addition, a survivor’s pension under the National Insurance Law.

Previous to the amendment, survivor’s pension was not paid to such widows.

The change is in force as of August 4, 1994.

– Delay in Submission of Claim

If a person has reached the absolute age of entitlement to old-age pension and is late in submitting his claim for pension, he shall be paid pension for the period during which he was at the absolute age (70 for a man, 65 for a woman), but for no longer than 5 years retroactively from the date of submission of claim.

If a person is late in submitting a claim for increment to pension for spouse, and the dependent spouse reaches the absolute age of entitlement, the increment to pension shall be paid for the period during which he was dependent, at the absolute age, but for no longer than 5 years retroactively from the date of submission of claim.

If an insured person entitled to old-age pension at the absolute age of entitlement passed away without having submitted a claim, and his survivors submit the claim, the pension shall be paid for the period during which the insured person was at the absolute age, but for no longer than 5 years retroactively from the date of submission of claim.

The above changes are a result of a decision of the Executive Board of the NII. and are in force regarding claims decided upon after November 1, 1993.

Previously, pensions were paid for one year retroactively under Law, and for up to three years retroactively under administrative arrangement.

The old-age and survivors’ pension rates for 1994, basic and including income supplement, are shown in the following tables.

LONG-TERM CARE

Insured persons, who as a result of their impediment, have become dependent on the help of others for the performance of everyday tasks, or are in need of supervision except those who are staying in a long-term care institution or whose main burden of care in any other institution is on a public body are eligible for the long-term care benefit. The quality age for benefit is 65 for men and 60 for women.

The benefit is paid directly to the body that provides long-term care services for personal care or -household management, at a rate of 25% of the average wage (equivalent to a full disability pension) for one who has become dependent to a large extent on the help of others for the performance of everyday tasks or is in need of supervision, and at a rate of 37.5 % of the average wage (equivalent to 150 % of a full disability pension) for one who has become completely dependent on the help of others for the performance of everyday tasks or is in need of constant supervision.

The benefit is paid to the entitled person himself, whose relative, who is living with him, cares for him, if in-kind long-term care services are not available for him, at the rate of 80% of the above rates.

No major changes in Long-Term Care Insurance came into effect in 1994, when about 50,000 persons received a long-term care benefit – the majority of them receiving a service benefit – as a monthly average.

GENERAL DISABILITY

– Compensation for AIDS Victims

Under this law, compensation is offered to those carrying the AIDS virus as a result of a transfusion of blood or blood products carried out by a public medical service between December 31, 1981 and January 1, 1987, as well as to his spouse and/or child who carry the AIDS virus as a result of contact with him.

The law compensates the ill person and his dependents (or survivors after his death) as follows:

– a one-time grant of NIS 250,000, linked to the index from the day on which the law came into effect (December 31, 1992);

– a monthly pension of 50% of the average wage to the ill person, of 12.5% of the average wage for his spouse, of 5% of the average wage for his children – up to the first three children – and of 12.5% of the average wage for his dependent parent(s);

– a monthly pension to his survivors: 35% to his surviving spouse, with an increment of 5% for each child, up to the first three children.

The compensation is administered by the National Insurance Institute. A general disability benefit is paid to those who have no capacity to earn a living (at a rate of 25% of the average wage) due to illness, accident or birth defect, or whose capacity to earn a living has been reduced as a result of the above by at least 50%.

In the framework of the war on poverty, the increment to the benefit for dependents was increased from 5% to 10% of the average wage.

About 88,000 persons received general disability pension in 1994.

The general disability benefit and attendance allowance rates for 1994 are shown in the following tables.

MOBILITY

Under a new mobility agreement signed between the National Insurance Institute and the government on January 9, 1995, the following changes were introduced retroactively regarding the mobility allowance:

1. Persons with 100% mobility limitation may be entitled to mobility benefits even if they receive attendance allowance, on condition that they are earners (earn wages of a sum equivalent to over 25% of the average wage) and do not receive a general disability benefit.

Previous to the change, receipt of attendance allowance ruled out entitlement to mobility allowance.

2. Henceforth, a person who received a mobility allowance and reached 65 years of age shall continue to receive allowance as long as he still meets all the other conditions of entitlement. Previous to the change, the continued entitlement after the age of 65 was conditional on the disabled person having received a standing loan (provided to persons with limited mobility to cover the taxes on the purchase of a car) before reaching the age of 65.

3. A higher rate of mobility allowance, as well as a higher standing loan, shall be paid to disabled persons who are nondrivers and whose car is equipped with a mechanism for raising a wheelchair, due to the higher expenses entailed in maintaining such a car (higher insurance costs, repairs, higher fuel costs). A higher standing loan shall also be provided them.

Previous to the change, only drivers benefited from these higher rates.

4. A person limited in mobility whose vehicle is out of order shall be paid a mobility allowance as a non-car-owner for the period during which his vehicle cannot be used, if he meets the conditions of entitlement for this allowance. Previously, the allowance for such persons was ceased completely after a period of three months of non-use of vehicle.

5. Persons entitled to an increase (or decrease) in their mobility allowance due to a change in their conditions of entitlement shall be paid their increased (or decreased) allowance as of the date of the change, and not as of the date on which the National Insurance Institute received proof of this change, as was the case previously.

6. A person limited in mobility regarding whom the Medical Institute of Road Safety determined new driving restrictions, yet who does not possess the necessary accessories in his vehicle to meet these new restrictions, shall continue to be paid the same mobility allowance for an additional 6 months from the date of the Institute’s decision. After the end of 6 months, if the person did not yet purchase a new vehicle and there is someone who drives for him, he shall be paid the allowance as a nondriver; if there is no-one who drives for him, his allowance shall be discontinued until such time as he purchases an appropriate vehicle.

Previous to the change, if the person did not purchase an appropriate vehicle following the new restrictions, there were two possibilities: if there was someone who drove for him, the allowance was decreased to that of a non driver immediately upon the Institute’s decision; if there was no-one who drove for him, the allowance was discontinued completely at the end of three months.

7. The mobility allowance paid to a person limited in mobility whose case is standing before the Medical Appeals Board shall not be ceased during the period of discussions on his case, at any time before the Board’s decision. Previously, the allowance was ceased upon the case being brought before the Board.

8. Mobility allowance shall continue to be paid at the rate paid to an earner to persons receiving payment of injury allowance, maternity allowance or unemployment allowance, for the period of such payment, as well as to persons in a study program in the country.

Previous to the change, mobility allowance was ceased during periods of such payments or studies.

Furthermore, soldiers in the regular any service shall be paid the higher mobility allowance paid to earners (and not that paid to non earners, as was the case previously).

9. Persons with 90% mobility limitation may be entitled to a loan or grant from the "loan fund". Previously, entitlement to loans or grants from this fund was conditional upon a mobility limitation of 100%.

All the above changes are in effect retroactively, from August 1, 1994.

About 12,900 car-owners received a mobility allowance in 1994, as a monthly average.

INCOME SUPPORT

– Sole-Parent Families Law

An amendment to the Sole-Parent Families Law, passed in March 1994 and in effect from the same month, expands the definition of sole parent to include the following:

– a person who has been living separately from his/her spouse for at least two years, and who has began proceedings to dissolve the marriage at least two years ago;

– an abandoned woman, as defined in the National Insurance Law;

– a new immigrant who has resided in Israel for over a year and for under two years, and whose spouse has not immigrated to and is not residing in Israel.

The previous definition of sole parent included only a widow/widower, divorced person and single person who had custody of a child.

Sole parents are entitled to special rates of income support benefit under the Income Support Law.

– Law to Reduce Poverty

On July 19, 1994, the Law to Reduce the Scope of Poverty and Income Gaps was passed by the Knesset. This law amended a number of articles in the Income Support Law – 1980, as follows:

The beginning age of entitlement to income support benefit was raised from 18 to 20; in certain exceptional cases, a benefit may be granted to those not yet 20.

Furthermore, a benefit may still be granted to those aged 18 to 20 (or over) if they do not have the capacity to work due to any one of a number of handicaps, or if they are released prisoners, persons in serious conditions of distress, or orphans or abandoned children not studying in a post-elementary school institution.

The rates of benefit were raised, in percentages of the average wage. The new regular rates, as percentages of the average wage, are: for a couple with one child – 36% (instead of 35%, as previously), for a couple with two or more children – 42% (instead of 40%), for a single person with two or more children – 36% less one credit point (instead of 35%); the new increased rates are: for a couple with one child 43.5 % (instead of 42.5 %), for a couple with two or more children – 49.5 % (instead of 47.5%), for a single person with two or more children – 43.5% less one credit point (instead of 42.5%), for a sole parent with one child – 42.5% less one credit point (instead of 40 %), for a sole parent with two or more children – 52.5 % less one credit point (instead of 47.5 %).

Those aged 46 or over, even if single and living with parents, are now automatically entitled to the increased rate.

The amendments are in effect as of August 1, 1994.

About 71,500 persons received income support benefit in 1994, as a monthly average.

The regular and increased rates of the income support benefit for 1994 are shown in the following tables.

ALIMONY

The rates of alimony payments are as determined by the court in the alimony judgement, but not more than the amount laid down in the regulations. The rates in the regulations are the same as those of the income support benefit at the increased rate, according to the number of children in the wife’s custody. Rates are also determined for children not in the custody of their mother or whose mother has remarried.

Under the Law to Reduce the Scope of Povert-y and Income Gaps, the rates of increment for children to the alimony benefit were increased from 7.5 % to 1O % of the average wage.

The alimony rates for 1994 are shown in the following table.

CHILDREN

– Family Allowance for Veterans

The Law for Special Arrangements in the Economy, passed in December 1993, amended the Demobilized Soldiers’ (Return to Work) Law and the National Insurance Law in such a way as to gradually equalize children’s allowances to all families, without distinction as to their military service. The change is to come into effect gradually in the course of four years.

The equalization of the allowances is carried out by gradual reduction of the credit points to veterans while increasing the credit points of the basic allowance, so that by January 1997 there will be a uniform rate of children’s allowances for all.

The credit point, defined in the Income Tax Order, serves as a basis for determining the value of the children’s allowance point.

The Family Allowance for Veterans is a special increment paid only to families one of whose members has served in the IDF or other security arm as defined by law, to the third and subsequent child in such families.

Study grant to sole-parent families

Two amendments dealing with the payment of a study grant to sole-parent families were recently passed by the Knesset.

The first, an amendment to the Sole-Parent Families Law, was passed in March 1994, and it expands the definition of sole parent (see above, chapter on Income Support).

The second, an amendment to the National Insurance Law, was ratified in June 1994, and it changes the sum of the grant, paid at the beginning of every school year, to the following:

– 18% of the average wage – for every child in sole-parent families aged 6 to 11 years;

– 10% of the average wage – for every child in sole-parent families aged 12 to 14 years.

Previous to the change, the grant was paid at a rate of 18% of the average wage for children aged 6 to 11 only.

– Law to Reduce the Scope of Poverty

One of the amendments resulting from the Law to Reduce the Scope of Poverty and Income Gaps was to article 109(a) of the National Insurance Law, increasing the allowance paid to the fourth, fifth and sixth children in all families. This increase is in effect as of August 1, 1994.

In 1994, about 1,887 million children received children’s allowance, as a monthly average.

MATERNITY

– Payment of examinations of pregnant women

In 1994, the National Insurance Institute continued its payment of amniotic fluid examinations of pregnant women aged 35-37, an arrangement which began in 1993. The Ministry of Health finances these examinations for women aged 37 and over.

Beginning in 1995, the costs of these examinations are covered in the basket of services provided under the new National Health Insurance Law.

– Risk Pregnancy Benefit

Under regulation 6 of the National Insurance regulations, claim for risk pregnancy benefit must be submitted no later than 6 months from the end of the first consecutive period of the risk pregnancy.

This regulation is an exception to the general principle anchored in article 128 of the National Insurance Law, by which a claim for a cash benefit may be submitted within twelve months of the day in which the situation entitling to benefit first arose.

In a recently pronounced court judgement, it was determined that regulation 6 is an unauthorized contradiction of an explicit instruction of the law, and it is therefore repealed.

As a result, claims for risk pregnancy benefit may be submitted up to 12 months from end of risk pregnancy period, as of July 1994.

– Payment of Maternity Allowance at Rate of 100% of Income

On October 8, 1994, Amendment no. 83 to the National Insurance Law was passed; under this amendment, an insured woman who has given birth and who is entitled to maternity allowance shall be paid 100% of her income liable for insurance contributions in the quarter-year preceding her maternity leave, from which income tax and insurance contributions are deducted.

The amendment is in effect as of November 1, 1994. Previous to the change, maternity allowance was paid at a rate of 75% of income. The rates of maternity benefits for 1994 are shown in the following table.

WORK INJURY

– Dependents’ Benefit and Benefits from Ministry of Defence

Amendment no. 92 to the National Insurance Law, passed by the Knesset on July 25, 1994, added a subsection (la) to article 145, as follows:

"(1a) a benefit paid under article 20a (a) of the Disabled Persons

(Benefits and Rehabilitation) Law – 1959 (Consolidated Version), shall not be considered a benefit for purposes of subsection (a). "

Under this amendment, a widow entitled to and receiving benefit under article 20a(a) of the above mentioned Disabled Persons Law shall be now entitled to receive, in addition, a dependents’ benefit under the National Insurance Law.

Previous to the amendment, dependents’ benefit was not paid to such widows.

The change is in force as of August 4, 1994.

The maximum and average rates in 1994 for daily work injury allowance and work disability benefit are shown in the following tables.

HOSTILE ACTION CASUALTIES

– Burial Expenses of Foreign Residents Who Died Abroad

The hostile action casualties regulations were amended so that burial expenses shall be paid regarding persons residing abroad who died as a result of a hostile action while working for an Israeli employer.

The burial grant is presently of a sum of $1,300 (U.S. dollars).

The change is in effect retroactively, as of March 1992.

– Amendment No. 4

In February 1994 the agreement between the Ministry of Finance and the National Insurance Institute on the provision of benefits to hostile action casualties was amended, as follows:

Hostile action casualties who were injured in 1948 and for whom a disability degree of 10 % – 49 % has been determined, shall receive the same benefits received by those with a 50% and over disability degree

(previously received only by the latter).

This change is in effect from April 1, 1994.

Widows of hostile action casualties injured in 1948, previously not included in the agreement, are now included and are entitled to the same benefits as other widows under Hostile Action Insurance.

– Amendment No. 18 to the Families of Soldiers Killed in Action Law

Following the enactment of Amendment 18 to the Families of Soldiers Killed in Action Law, a parallel amendment was enacted to the Benefits for Hostile Action Casualties Law, incorporating the following main changes:

– the various levels of benefits paid to widows without children were abolished, and such widows now receive a uniform monthly benefit.

– in addition to her monthly benefit, widows shall receive an increment of 10% upon reaching the age of 60.

– bereaved parents shall receive an increment of 10% to their benefit upon one of them reaching the age of 65.

– widows shall receive a special grant after seven years of widowhood .

– an orphan who has reached the age of 30 and has not yet married shall receive the same full grant paid to orphans upon their marriage.

All these changes are in effect as of November 9, 1994.

RESERVE SERVICE

– Reservists’ Benefit for One-Day Service

Under Amendment no. 87 to the National Insurance Law, persons who serve more than twice during the course of the year are entitled to benefit for one-day service, from the third day onward.

Previous to the change, only those who had served more than six times during the course of the year were entitled to this benefit, and only from the seventh day onward.

The change applies to persons who serve a one-day service from January 1, 1994 and thereof.

The minimum and maximum daily reserve service benefit rates for 1994 are shown in the following table.

UNEMPLOYMENT

– Unemployment Benefits and Old-Age Pensions for Women Aged 60-65.

Under Amendment no. 80 to the National Insurance Law, in effect from November 1, 1993, women may be eligible for unemployment benefits up to the age of 65, instead of up to the age of 60, as was the case previously.

If an insured woman is entitled to unemployment benefit for the same month for which she is entitled to old-age pension, the higher of the two benefits shall be paid to her.

– Entitlement to Training Allowance to Trainees in the Construction Industry – Renewal of Agreement.

The agreement under para. 200 of the National Insurance Law between the government and the National Insurance Institute, under which trainees in the construction industry receive a training allowance from the Unemployment Insurance branch of the NII, has been renewed a number of times, and has of late been renewed again, until March 31, 1995.

The renewed agreement differs from the previous one regarding the scope of entitlement. Under the renewed agreement, only the following are entitled to training allowance: Israeli residents aged 18 or over who were referred to the training by the labour exchange, and who, at the beginning of their studies, were entitled to unemployment allowance, were entitled to income support benefit or were new immigrants residing in Israel for over 6 months and who were entitled to a subsistence allowance from the Ministry of Immigrant Absorption. (Previously, also persons not entitled to unemployment allowance could receive the training allowance.)

In all other aspects, the renewed agreement is identical to the previous one, and aimed to meet the continuing demand for professional workers in the construction industry.

– The Law for Absorption of Demobilized Soldiers

On April 19, 1994, the Law for Absorption of Demobilized Soldiers was ratified by the Knesset. This law deals with the return of young men and women to the various aspects of civilian life after serving their compulsory army service – education, housing and vocational training for employment – and the payment of grants.

Article 24 of the new law deals with the entitlement of demobilized soldiers to unemployment allowance, and amends the National Insurance Law as follows:

1) article 127N, dealing with the maximum period for payment of unemployment 37 allowance – this period is 175 days per year for an unemployed person aged 45 or over, or for a breadwinner for at least three dependents, 70 days for a demobilized soldier, and 138 days, in every other case.

Previous to the change, the maximum period for payment of unemployment allowance for demobilized soldiers was 138 days, the same as for other unemployed.

2) article 127P, dealing with the payment of unemployment allowance during a period of vocational training. As a general rule, an entitled person who has been sent to vocational training is paid an allowance of an amount equivalent to the difference between the payment given him during training and the full unemployment allowance to which he would have been entitled were he unemployed. According to the change, demobilized soldiers shall be paid, for the entire period of vocational training, an amount equivalent to 80% of the unemployment allowance to which they would have been entitled were they unemployed.

Previous to the change, demobilized soldiers were paid allowance for the period of vocational training as according to the general rule described above.

These changes apply to young women who have completed a period of voluntary national service, in addition to soldiers who have completed a period of compulsory army service – all as of April 1, 1994.

– Grant to Persons Referred to Work at Low Wages

According to an amendment to the National Insurance Law, a young person

(up to 35 years of age) who is referred by the labor exchange to a low-wage job (a job at which the wages are lower than his unemployment allowance) and who works at such a job for at least 75 days, is entitled to a grant, equivalent to the difference between the average daily income from his work and either the unemployment allowance (to which he would have been entitled were he still unemployed) or 75 % of the average daily wages (prior to his unemployment) which served as a basis for calculating his unemployment allowance.

If the young unemployed person refuses to accept a low-wage job, he is thenceforth not entitled unemployment allowance.

Previous to the change, entitlement to unemployment allowance was not ruled out for such persons. However, if these persons did voluntary accept a low-wage job, they were entitled to a supplement to their unemployment allowance, at the same rate as the above grant.

The change is in effect as of August 1, 1994.

About 60,000 persons received unemployment allowance in 1994, as a monthly average.

The maximum daily unemployment benefit and demobilized soldier’s benefit rates for 1994 are shown in the following table.

REHABILITATION

In addition to the various insurance branches paying cash benefits, the Rehabilitation Department of the National Insurance Institute provides vocational rehabilitation to disabled persons (including those injured at work or by hostile actions) who have lost their ability, on account of their impediment, to work in their previous occupation or in any other suitable occupation, as well as to widows and widowers.

Vocational rehabilitation and subsistence pay to widows/widowers

Under the definition of widow and widower in regulation 1 to the National Insurance regulations (vocational rehabilitation and subsistence pay-1979), vocational rehabilitation is provided on condition that the widow or widower receive survivors’ pension or dependents’ pension.

On April 11, 1994, this condition was repealed, so that all widows and widowers as so defined under law, even if they do not receive pension, are entitled to vocational rehabilitation.

As a result of this change, young widows and widowers under the age of 40 without children, who are recognized by the National Insurance Law as widows and widowers but who are not entitled by law to a monthly pension, may now receive vocational rehabilitation.

This change is in effect as of July 1994.

COLLECTION OF CONTRIBUTIONS

The principle source of financing National Insurance benefits is the insurance contributions collected, both directly from the insurees, and those paid by the government instead of the employees and non-employee insurees (as of 1986, when the rates of contributions imposed on these insurees were reduced).

In addition to the collection of contributions for insurance branches, the NII collects "parallel tax" for the sick funds (Kupot Holim) under the Parallel Tax Law (and beginning in 1995, health insurance contributions as well – see chapter on "Changes in Progress and Future Plans").

The insurance contribution rates in 1994 for the various insurance branches and from the various categories of insured are shown in the following table.

DEMONSTRATION PROJECTS

– Care of Homeless in Tel Aviv-Jaffa

The project aims at initiating and following through residential rehabilitation for the homeless. In the framework of the project, about 100 people are in various stages of care every month, and another 60 people are in the preliminary stage of being located in the street where they live.

The project is sponsored by the Social Service Bureau of Tel Aviv-Jaffa, and is being jointly implemented by the Ministry of Housing, the Ministry of Labour and Social Affairs, the Ministry of Health, Halmish, the General Sick Fund, the Tel Aviv- Jaffa municipality, the National Insurance Institute and several volunteer organizations. It began in September 1993 and the initial experimental project is expected to continue until September 1996.

– A Mobile Workshop for Pensioners – The Leo Baeck Education Center in Haifa

The project aims to meet the need for occupation and social activity of homebound pensioners who are still independent enough to live in the community and not in institutions. A second aim is to provide social care and follow-up on the elderly person’s functioning.

These aims are achieved by bringing to the home various handicrafts such as knitting, embroidery and simple woodwork, as well as a visiting social worker. Weekly visits are made by the occupational therapist and the social worker alternately.

The project is funded and implemented by the municipality of Haifa, the Leo Baeck Center and the National Insurance Institute. On completion of the experimental period in June 1994, this became a regular ongoing service.

– Bracha – Occupation for the Homebound in Kiryat Tivon

The goal of the project is to provide occupation and creative activity to the disabled, to form contact between this population and the community by means of project staff and to raise the self-image of participants by means of activity, sale of projects and contribution to advancing welfare activities in the community.

Stages of implementation include mobilization of teachers of crafts, acquisition and preparation of work material, and actual teaching of participants.

The project is funded jointly by the local authority of Kiryat Tivon and the National Insurance Institute. It began in March 1993 and continued until June 1994, when it was incorporated into ongoing local services.

– Emergency Treatment Center for Children at Risk and their Parents

This center was set up for children in the Haifa and Northern region who are removed from their home by a court injunction. The center, which accommodates 15 children aged 4-16 for a period not exceeding 3 months – up to a total of about 25 children a year – provides a framework for diagnosis, medical treatment and crisis intervention for the children and their families while determining the long-term placement solution.

The project began in November 1993 and is expected to continue on an experiments basis until October 1994. It is operated by the House for Every Child organization with the support of the Service for the Child and Youth of the Ministry of Labour and Social Affairs, Joint-Israel and the National Insurance Institute.

– Occupational Follow-up for Released Prisoners

The project, operating in Tel Aviv and Jerusalem, prepares released prisoners joining the labour force by means of occupational workshops conducted before the release from prison, counseling and assistance in finding work and ongoing support for the initial work period as well as an occupational follow-up in the critical 6-mo period following release from prison.

The project, carried out by the Prisoner Rehabilitation Authority with the support the National Insurance Institute, began in December 1993 and is expected to continue until September 1995.

– Training of Former Drug Addicts as Rehabilitation Counselors

The project aims at training a group of 15 former drug addicts to be rehabilitation counselors, in the framework of an 18-month academic program of one day of learning per week, accompanied by a practical trainining program.

The project, operating from October 1994, is being carried out by the Jerusalem Organization for the Battle Against Drugs, together with the Family and Community Departrnent of the Ministry of Labour and Social Affairs and the Hebrew University, with the support of the National Insurance Institute during the initial experimental year.

– Prevention of Falls of Elderly Persons in Beer-Sheva

The aims of the project are to try to reduce the number of falls of elderly persons, to locate and treat the risk factors of falls, to develop tools for identifying elderyl at risk, to develop a model of a health program for the elderly in the community a on service providers.

In the framework of the project, a special clinic to treat falls of elderly persons has been set up in the Soroka Hospital in Beer Sheva, staffed by specially trained medical personnel. The health promotion courses and program include physical fitness classes for low-risk elderly and an individual treatment program for the high-risk elderly in the community.

The project, operating from December 1993, is being carried out by the Soroka Hospital with the support of Eshel and the National Insurance Institute for the first two experimental years.

– Home Occupation for Chronically Ill Patients – Yad Sarah Organization

The project, presently operating for an experimental period in three cities in Israel and including 150 participants, aims to develop creative and original occupations for disabled and home-ridden persons, thereby increasing their self-image while creating a bridge for them to the outside world through visits of volunteers especially trained for the project.

Fields of occupation offered include acquaintance with the computer, home growing of plants, handicrafts and writing autobiographies.

The project, operating from October 1994, is being carried out by Yad Sarah. The National Insurance Institute is funding the initial experimental year.

– Model for Group Treatment of Victims of Sexual Abuse

The project provides group treatment and support to child victims and to adults who were victims of sexual abuse as children, and to their families, while teaching new ways of confronting pressure situations. Treatment groups include children aged 6-14 and youths aged 15-18 who have been sexually abused, non abusive parents and adults who had experienced abuse as children.

The projects which began in December 1994, is expected to continue in the experimental setting until November 1995, and is carried out by Mital, the Israel Center for Treatment of Sexual Abuse of Children and Adults Who were Abused as Children. Initial funding is provided by the National Insurance Institute.

INTERNATIONAL CONVENTIONS ON SOCIAL SECURITY

International social security conventions, bilateral and multilateral, are designed to assure equality of treatment or reciprocal treatment, the right to export benefits, as well as to protect rights of persons and their families who move from one country to another for employment or other reasons. The need for such conventions stems from the fact that social security programs do not usually give adequate consideration to the special needs of persons who are outside its jurisdiction. Israel, as an immigration country, is interested in such conventions in order to assure each beneficiary an adequate benefit for prior social security credits in their country of origin.

Bilateral Conventions

Israel signed the first bilateral agreement in 1957. Since then, continuous efforts have been made to enlarge the scope of our international cooperation through bilateral conventions. At the present time, ten such agreements have been concluded and are in force, and negotiations have commenced with Hungary and the Ukraine towards a bilateral agreement.

CHANGES IN PROGRESS AND PLANS

– The National Health Insurance Law

As of January 1, 1995, the National Health Insurance Law came into effect in Israel. This law changes the roles of the central bodies active in the health system, namely: the sick funds, the Ministry of Health, the Ministry of Finance and the National Insurance Institute.

The relationship between the National Insurance Institute and the health system, prior to the law, was anchored in various legislation and encompassed mainly the following activities:

– the financing of the medical expenses of work-insured persons;

– the financing of the medical expenses involved in the hospitalization of women giving birth;

– the granting of an annual allocation to partially cover the costs of maintaining dependent elderly persons in nursing wards or homes;

– the collecting of parallel tax and its distribution among the various sick funds;

– the provision of medical insurance to recipients of old-age and survivors’ pensions who are entitled to income supplement, of general disability pensions and of income support benefits.

The purpose of the new law is to guarantee medical services to every resident by means of a defined basket of services, supervised by the government, with the Ministry of Finance committing itself to cover any deficits which may arise. The central ministerial responsibility for the implementation of the new law rests upon the Ministry of Health, whose task it is to supervise the quality of the work carried out by the sick funds while continually updating the basket of services, to guarantee the proper functioning of the hospitals, to register non-insured residents, etc.

The role of the National Insurance Institute within the health system has greatly expanded under the new law, and now includes the following activities:

1. the managing of a file of the insured persons registered in the various sick funds:

2. the continued coverage of the medical expenses of work-injured persons;

3. the continued coverage of the hospitalization of women giving birth, with the necessary changes arising from the inclusion of this service in the law’s basket of services;

4. the continued participation in financing the hospitalization of elderly in nursing wards and institutions;

5. the distribution of parallel tax and health insurance contributions among the sick funds;

6. the collection of health insurance contributions (in addition to the parallel tax).

The last activity, a new function to be carried out by the National Insurance Institute under the National Health Law, shall replace the collection of uniform tax (or membership dues) which was previously carried out by the sick funds according to the regressive method, which included various discounts and exceptions under special agreements and which had a relatively high administrative expenditure.

Under the new method, the NII collects insurance contributions at a minimum rate of 4.8% of wages/income, up to a level of four times the average wage. Both employees and self-employed persons benefit from a reduced rate of 3. 1 % of wages/income of up to half the average wage.

The regulations determine special low rates of insurance contributions for needy population groups (such as the elderly, unemployed, low-income, etc.), taking into account their economic situation.

– Compensation for Radiation Victims (treated for ringworm)

Under a new law, compensation is offered to those suffering from the effects of radiation (administered them between January 1, 1946 and December 31, 1960) aimed at treating the ringworm disease (tinea capitis).

The compensation will be paid to those suffering from one of a number of specific diseases listed in an appendix to the law, all of which are cancerous, in the area of the head and neck, including cancer of head and neck and leukemia, as well as lack of hair in the scalp, in the irritated areas.

The law does not require proof of a causal link between the radiation and the disease.

The compensation is in the form of a grant, calculated as 25% of the average wage multiplied by the percentage of disability multiplied by 70, to a person for whom a medical disability degree of up to 40% has been determined.

Persons for whom a medical disability of 40% or more has been determined will receive a monthly pension of 25% of the average wage in accordance with the degree of medical disability (for example: 25 % of the average wage if the degree is 100%, 12.5% of the average wage if the degree is 50%).

In addition, a one-time grant of NIS 50,000 shall be paid to persons for whom a medical degree of 40% to 74% has been determined, and of a sum of NIS 100,000 to persons for whom a medical degree of 75 % or more has been determined.

The above sums are linked to the index from the day the law came into effect: January 1, 1995.

A grant shall be paid to the survivors (spouse and children) of radiation victims, even if the victims passed away before the law came into effect.

The compensation is administered by the National Insurance Institute.

– Benefit for Child Orphaned as a Result of Violence in Family

The problem of domestic violence has increased in recent years, the main victims usually being women who are mothers of children. The distress of such children, orphaned as a result of domestic violence, is particularly acute. It is therefore proposed to provide these children with a monthly benefit, anchored in law, which will guarantee them adequate means of subsistence following the break-up of the family unit.

It is proposed that the monthly benefit be of the same rate as that provided to an orphan whose parent died as a result of a work injury. The benefit is calculated as a percentage of the average wage. It is further proposed that the benefit be adjusted in the same manner as are benefits to dependents in the Work Injury insurance branch.

The new benefit shall be financed by the government and implemented by the National Insurance Institute.

– Changes under Mobility Agreement

A number of changes under the new mobility agreement signed between the National Insurance Institute and the government relate to the standing loan (a loan provided under Mobility Insurance to persons with limited mobility to cover the taxes on the purchase of a car):

1. To the list of relatives who may drive the car for the person with limited mobility who is a non driver (does not have a driving license) have been added the grandfather and grandmother of this person. Previous to the change, only the following relatives were authorized to drive the car for such a person : son, daughter and their spouse, father, mother, including adopting step-parent, brother, sister, and their spouse.

Furthermore, one who takes care of the person with limited mobility most hours of the day may be authorized to drive for him, even if he is not a relative.

2. The National Insurance Institute shall now enable the person with limited mobility to take his vehicle, acquired by means of the standing loan, abroad, under certain conditions. In principle, mobility benefits are granted only as long as the entitled disabled person is in Israel, and previous to the change, the NII did not permit this person to take his vehicle abroad.

3. A person with limited mobility will not be required to return the standing loan he received before 12 months have passed since the date on which one of the conditions of entitlement to the loan ceased to exist. If 12 months have not yet passed since this date, and all the conditions of entitlement to standing loan return in full, the person will not be required to return the loan.

Previous to the change, a person with limited mobility was required to return the standing loan if at any time any one of the conditions of entitlement ceased to exist.

4. The NII will not demand the return of the standing loan in cases of hospitalization, if a relative who drives for the person with limited mobility takes upon himself part of the care of this person.

Previous to the change, the NII required the return of the standing loan in all cases of hospitalization of the person limited in mobility for a period of six consecutive months or longer.

5. A non-driver shall be entitled to a standing loan for a commercial vehicle, if the Medical Institute for Road Safety determines that this is the vehicle he needs. Previously, all non-drivers received a loan for a car of 1300 cc. only, no matter what vehicle was determined as appropriate for them by the Institute, thereby requiring them to find additional sources of financing the purchase of the vehicle.

All the above changes are in effect from February 5, 1995.

– Special Rate of Income Support Benefit for Spouse of Prisoner

Under regulation 8(C) enacted to the Income Support Law, a prisoner’s spouse shall receive income support benefit at the special rate paid to a sole parent, if the prisoner has been imprisoned or under arrest for at least 30 consecutive days.

The resulting benefit paid to the spouse and children of a prisoner shall thus be significantly higher than the benefit previously paid them, and shall entitle them, in addition, to a study benefit for school-age children.

This change is in effect as of March 1, 1995.

– Entitlement to Income Support Benefit when Spouse is not Israeli Resident

Under regulation 7(5) enacted to the Income Support Law, a claimant of income support benefit may be entitled to benefit even if his/her spouse is not a resident of the country.

Previous to the change, if the spouse of the claimant was not a resident, eligibility to benefit was automatically ruled out.

This change is in effect as of March 1, 1995.

– Studies Which Do Not Rule out Entitlement to Income Support Benefit

A course of studies which continues for up to 12 months shall not rule out eligibility for income support benefit, even if the course is for purposes of a government test or an educational course recognized by a government ministry.

Furthermore, a course of studies which continues for beyond 12 months shall not rule out eligibility for benefit, if the course is for supplementing a high-school education.

Previously, such courses, extending for periods of over 12 months, ruled out eligibility.

The change is in effect as of February 1, 1995.

– Financing of Reserve Service Insurance Branch

In accordance with a recent government decision in the framework of the Law for Special Arrangements in the Economy, collection of insurance contributions for the Reserve Service Insurance branch has ceased, and the Ministry of Defence shall cover the expenses of the National Insurance Institute arising from payments of reservists’ benefits as of January 1995.

Until now, the Reserve Service Insurance branch has been financed by the insurance contributions paid by all insured persons under the National Insurance Law employers, employees, self-employed and other insured – at a rate of 2.00% of income or wages. Accounts between the National Insurance Institute, the Ministry of Finance and the Ministry of Defence were settled by means of a special method aimed at encouraging savings in reserve duty days. However, this method proved ineffective; furthermore, it was felt that there was no justification that expenses in the area of defence be covered by the social security budget.

As a result, it was decided that the reservists’ benefits would be financed by the State budget, although examination of eligibility and payments of benefit shall continue to be carried out by the NII.

In the last quarter-year of 1994, the Ministry of Finance paid the share of the employers in payment of insurance contributions, under a special agreement.

– Collection of Insurance Contributions

As a result of the Law to Reduce the Scope of Poverty and Income Gaps, a reform was carried out in the system of collection of insurance contributions. Following are the main changes incorporated in the reform:

– Maximum Income/Wages for Payment of Insurance Contributions

The ceiling of maximum income for payment of insurance contributions was determined as four times the average wage for all insured persons, both employees and self-employed, as of January 1, 1995.

Previous to the change, the ceiling had been set as three times the average wage for employees and four times the average wage for the self-employed.

– Income Liable for Insurance Contributions

As of January 1, 1995, all income from work liable for income tax shall also be liable for insurance contributions. As a result, all income components previously exempt from insurance contributions (such as vehicle and telephone maintenance, travel reimbursement, subsidized meals and convalescence grant) shall now be included in the income base liable for insurance contributions.

– Reduced Rates of Insurance Contributions

As of January 1, 1995, all employees, self-employed and other insured persons pay reduced rates of insurance contributions to the various insurance branches, on income/wages which is up to half the average wage in every quarter-year, beginning in January. In January 1995 the income ceiling entitling one to reduced rates was NIS 2,042 (half the average wage). These reduced rates apply to parallel tax and health insurance as well.

Previous to the change, reduced rates of insurance contributions existed only for selfemployed and other non-employees.