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One in 10 Israelis is 65 years of age or older with the proportion expected to reach 12 percent within two decades while the over-75 age group grows at a rate of 6% per year. Yet, although medical advances and improved living conditions have enabled us to live longer, the quality of life of old people has not necessarily improved, particularly when higher expectations are taken into account.
The "baby-boomers" born during the first two decades after World War II are now in their 50s. In Western countries, at least, they have become accustomed to steadily improving standards of living and expect to maintain those standards in their old age.
Long-term care is an expensive business, ranging from NIS 6,000 for care in the home up to as much as NIS 13,000 in a luxurious long-term care facility - and all this at a time when the income of old people drops by at least 25% on retirement.
This means that without adequate long-term care insurance, the financial burden both direct (actual monthly outlay) and indirect (lost work-days for children taking care of their parents) is considerable, and can involve dipping into accumulated savings to cover the cost or relying on the children to pay for the care, which may be difficult because the children have their own households to take care of or because of unwillingness on the part of the children to pick up the tab for other reasons.
Fifteen percent of Israelis over the age of 65 are entitled to the National Insurance Institute's long-term nursing allowance, reaching 48% in the over 85 age group.
The Institute's long-term care allowance is paltry, however, running to a maximum of around NIS 1,200 per month and restricted by very strict entitlement conditions. This means that if the family or retiree is not to be crippled financially, buying long-term insurance as early as possible during one's working life is essential for having one's golden years indeed golden, or at least being able to live in dignity.
Long-term care insurance is, like health insurance, split into three levels. The first level is the allowance given by the National Insurance Institute, which as we said previously does not represent anything like a reasonable solution. The second level is provided by the supplemental health schemes offered by the four public health funds. Each scheme deals with the problem differently, but in all cases the maximum allowance (depending on the age at which you joined the supplemental insurance program) is around NIS 5,000 monthly for up to three years, going down to about half that amount for the next two years and dropping off completely thereafter.
Some of the health funds give rebates against receipts for payments made for long-term care, while others give a flat sum. The conditions for receiving the allowance are stricter in some schemes than others, involving loss of four out of the six routine daily functions (called ADLs in the professional jargon), while others give compensation when three of these functions are lost. The supplemental health schemes offer a basic, more or less decent level of support for the cost of long-term care.
As with health insurance, the upper level is offered by the private insurance companies and the entitlement conditions are much easier (any three out of the six ADLs or two if one of them is incontinence or if the person is suffering only from mental exhaustion - which basically includes Alzheimer's disease and other dementias). The amounts of compensation are NIS 2,000 up to NIS 20,000 per month, at the customer's discretion. The compensation amounts are paid out without the policy-holder having to provide proof of having purchased goods or services related to his condition. Compensation is paid for three years, five years or one's whole life, all starting from the date the person requires long-term care. The premiums differ according to the amount of time compensation is required. For statistical reasons of long-term-care patients, insurance brokers recommend whole of life for people starting the plan before the age of 60, and three or five years for older people.
The premiums are fixed according to age of entry into the plan, which means the earlier you join, the lower the fixed premium. The maximum age of entry is 85, but for anybody between 65 and 84 who wants to start a long-term care plan, the insurance companies are very strict about existing health conditions, often rejecting applicants because of what appear to be relatively mild conditions that may be adequately controlled by medication.
All policies have a "surrender value" element, which means that if, for example, after 20 years of paying premiums you decide to stop paying, you are still entitled to long-term care compensation at a lower level than that originally purchased, without paying any further premiums. One company has just launched a plan in which you pay premiums up to age 65 and continue to be fully covered without paying any premiums after age 65. Other plans take into account the fact of your carrying the supplemental health insurance long-term care insurance, allowing you to "top-up" the amount without paying a premium for an amount already covered. There are also plans that - in addition to the monthly compensation amount - give a lump sum for the purpose of suited residential apartments to the needs of a disabled person.
The above is a general survey of long-term care insurance in Israel. When considering purchasing long-term care insurance, you should consult a professional to select the plan most suitable for you.
Jonathan Marcus is an insurance broker.