National Insurance - Bituach Leumi Part I

This post has been compiled for us by Tzvi Szajnbrum a lawyer who has some free services for Olim.

National Insurance Part I

Different categories of those insured include:

Self Employed

Who is a Self-Employed worker?
A self-employed worker is one who meets one of the following conditions:

· He works in his occupation for an average of at least 20 hours a week.
· His average monthly income from his occupation is not more than 50% of the average wage.
· He works at his occupation for 12 hours a week and his income is over 15% of the average wage.

A self-employed person who is registered at the NII and who pays his insurance contributions regularly is covered in all insurance branches except unemployment and bankruptcy.

Who is a Self-Employed Person?
A self-employed person is defined as one of the following:

· A person who is engaged in his occupation for at least an average of 20 hours a week
· A person whose average monthly income from his occupation is more than NIS 3,964 (as of 01.01.2009) - 50% of the average wage.
· A person who is engaged in his/her occupation for at least an average of 12 hours a week, and his average income is more than NIS 1,189 (as of 01.01.2009) - 15% of the average wage.

The Self-Employed Person
A self-employed person with additional income from a source other than work must pay insurance contributions from this income as well, while it is equal to or higher than his/her income as a self-employed person, up to the maximum income liable for the payment of insurance contributions

Registration with National Insurance Institute
A self-employed person must register at the National Insurance Institute immediately upon opening his business. A self-employed person who was injured at work is entitled to work injury benefit only if he/she was registered at the National Insurance Institute as a self-employed person at the time of the injury and paid insurance contributions.

Who must register?
· A married woman who works as a self-employed person at her husband’s business must register herself at the National Insurance Institute and pay insurance contributions.

· A married couple working together in a joint business can divide up the income from their business between themselves and pay insurance contributions according to each one's share, on condition that the division is between 1/3 and 2/3 of the overall income. If one of the spouses has income that does not originate from their joint business, this spouse can be credited with only 1/3 of their income from the joint business.

· A self-employed person who also has an income from work as an employee must pay health insurance at both workplaces, up to the maximum income on which insurance is payable.

· A self-employed person with additional income from a source other than work must pay insurance contributions from this income as well, while it is equal to or higher than his/her income as a self-employed person, up to the maximum income liable for the payment of insurance contributions.

· The maximum income on which contributions are paid. No payments are made on income above this amount. The amount is five times the average wage, as published in December 2005, and updated each January by the change in the consumer price index.

· A person who does not meet the definition of self-employed person as specified above is not considered a self-employed person and the regulations applicable are as specified (see below).
· A farmer who meets the definition of a self-employed person is required to register at the National Insurance Institute and pay insurance contributions on his/her income.

· The wife of a farmer in a cooperative settlement (moshav) is also considered a self-employed person and is required to register and pay insurance contributions for herself.

· If the farmer or his wife do not work in their farm, for example, if they work as employees outside the farm and only reside at the farm they must contact the National Insurance Institute and submit ratifying documents

The rates of insurance contributions paid by a self-employed person:

A self-employed person aged between 18 and retirement age pays:

· For the share of the income that is up to 60% of the average wage NIS 4,757 (as of 01.01.2009) - % 6.72 (as of 07.01.2002) national insurance and % 3.10 (as of 01.01.1995) health insurance contributions.

· For the share of the income that is over 60% of the average wage and up to the maximum income liable for insurance contributions: % 11.23 (as of 01.01.2006) national insurance and % 5.00 (as of 01.01.2006) health insurance contributions.

Who is exempted?
· An unemployed new immigrant within 12 months following the date of immigration to Israel;
· A person aged 18 who has not yet been drafted and is unemployed, is exempt from payment for a period of up to 12 months provided that he/she is drafted to the army no later than age 21;
· A high school student (11th and 12th grades) who has reached the age of 18 is exempt from payment for the period of his/her studies provided that he/she is drafted up to age 21;
· A prisoner or detainee in prison for longer than 12 months.

Attention:
· A soldier in regular service receives healthcare services from the IDF and is not insured under the National Health Insurance Law, and therefore is not obligated to pay health insurance contributions.

· A career-service soldier is obligated to pay health insurance contributions.
A person whose military service is postponed due to academic studies ("atudai") has to pay national and health insurance contributions himself during the period of studies. The National Insurance Institute will send him the payment booklets and he must pay the insurance contributions quarterly.

· A student enrolled at a "Yeshivat hesder": beginning January 2002 the Ministry of Defence pays national and health insurance contributions for him, from the date of drafting and up to the date of demobilization, including the periods of study at the Yeshiva.

How to pay?
· Self-employed non-workers students and yeshiva students:

You may pay by means of: a pay-book; credit card; standing order at the bank; debt settlement by checks

· Employers – on behalf of their employees and pensioners:
You may report and pay on form 102 by means of: the NII payment site; a bank; the “representatives” computer system; a hand-written report


· Self-employed non-workers students and yeshiva students:
You may pay by means of: a pay-book; credit card; standing order at the bank; debt settlement by checks

Differences between Employee and Self-Employed:
· Employee the employer must report on his/her wages and pay insurance contributions for him/her.

· Self-employed must register at the National Insurance Institute and pay insurance contributions himself.

· Employee is insured both under unemployment insurance and under insurance for employees’ rights in cases of bankruptcy or corporate liquidation.

· Self-employed is not insured under unemployment insurance or under insurance for employees’ rights in cases of bankruptcy or corporate liquidation.

· Employee rights are not affected due to delayed payment of insurance contributions by his/her employer.

· Self-employed rights may be affected if he/she does not register himself or is late in payment of insurance contributions.

If you need more information or clarification on any subject concerning the NII, please feel completely comfortable to contact Tzvi by email or phone, his contact information can be found on his website:

www.lawadv.com or www.voleh.org