The article was written in collaboration with a Siud website
It seems that those familiar with the long-term care insurance industry were not particularly surprised when it was learned at the end of 08/2024 that no insurance company submitted an offer to operate the long-term care insurance of Clalit Health Services. In light of the losses accumulated by the long-term care funds and the desire of the insurance companies already operating in the field of long-term care insurance to get out of it, this was an almost self-evident result.
However, this is still a severe blow to the approximately 2.6 million Israelis who are insured with long-term care insurance through the general insurance, as well as to millions of other Israelis who are insured through the other health funds. Thus, although in 2024 the insured saw a deterioration in the policy conditions and an increase in the premium, the future probably holds even more difficult decrees, as has been published more than once on the nursing website.
What is the nursing insurance crisis?
A significant part of the Israeli population holds long-term care insurance policies purchased from one of the four health funds. In general, with the exception of the price, the terms of the nursing insurance policies are the same in all funds. The insured's payments for the long-term care insurance go into a designated fund known as the "nursing fund" and from that the benefits to the insured are paid.
The long-term care insurances of the health funds are operated for the funds by the private insurance companies. Due to various reasons, including the aging of the population, past lenient policies regarding the approval of long-term care claims, and more, the long-term care funds, which, as mentioned, are used to pay the benefits, have become increasingly unprofitable in recent years.
At the beginning of 2024, the Capital Market Authority ordered a number of emergency actions to reduce the deficit in the funds, including a reduction of the monthly coverage amount from 6,000 NIS to 5,000 NIS. Unfortunately, these actions did little to reduce the deficit. Even the increase in premiums and the tightening of the conditions for approval of a long-term care claim by the general health insurance fund did not help, and the forecast today is that the capital in the long-term care fund will be sufficient until the end of 2024 at the most.
At the beginning of the month of 07/2024, a team appointed by the Insurance and Savings Capital Market Authority to investigate the crisis in the nursing insurance industry of the health funds submitted the interim conclusions. These include postponing the eligibility age, more in-depth medical examinations, determining the size of the allowance according to the state of the fund, and more.
A huge difference from the 2018 tender
In order to understand the depth of the crisis we are in today, it is worth going back to 2018. In this year, the General Health Insurance Fund put out a tender for the operation of its long-term care insurance for a period of five years. The actuarial forecasts at the time were that the nursing insurances of the health funds would be stable for 100 years and that the premium to the insurance company would be more than one and a half billion NIS per year.
The Phoenix insurance company submitted the best offer, but the Harel insurance company, which submitted the second best offer, agreed to improve its offer and thus won the tender.
During the year 2023, towards the end of the tender period, Harel announced that it was not interested in continuing to operate the long-term care insurance. The crisis was then barely averted after the General Assembly and Harel, with the vigorous encouragement of the Capital Authority and the High Court, agreed to extend the contract for another year. The agreement admittedly took time , but time is running out. Thus, as mentioned, in the month of 8/2024, the general company issued a new tender for the operation of the long-term care insurance of its insured, but no insurance company submitted an offer for the field that had become unprofitable.
As a result, unless a solution is found, starting in the beginning of 2025 the long-term care insurance of the General Insurance will enter a state of self-liquidation ("Run Off") which will result in a significant harm to the approximately 2.6 million Israelis insured through the General. How significant will the damage be? Suffice it to note that not only will it no longer be possible to join the general long-term care insurance, but that the monthly long-term care insurance benefit will drop from a total of about 5,000 NIS to a total of only a few hundred NIS.
There is no doubt that the immediate victims are the general insured. However, in the end, about 2.3 million Israelis, who are insured through the other three health funds, will also be affected.
The capital market authority's dilemma
As of today, the insurance company Menora is the one handling the long-term care insurances of the other three health funds for different periods of time. Thus, Menora is obligated to operate Meuhedett's long-term care insurance until the end of 2024, Maccabi's until the end of 2024 (with the possibility of extension until the end of 2025) and Leumit's long-term care insurance until the beginning of 2027.
It is possible, because Menora will be ready to take on the task of operating the general's long-term care insurance as well. However, this option will turn Menora into a monopoly in the field of long-term care insurance operations and will put the Capital Market Authority in front of a real dilemma whether to approve it.
The insured public will pay
Different solutions are currently being proposed for the crisis, including making the long-term care insurance part of the state health insurance. However, as of now, the future of long-term care insurance in Israel is shrouded in fog.
The only thing that can be said with certainty is that any solution that will eventually be found to the long-term care insurance crisis will most likely bring harm to the insured public, whether by raising premiums, worsening insurance conditions, tightening eligibility criteria, and more.
As a rule, the individual insured cannot change the badness of the decree. However, many in the population hold, in addition to the long-term care insurance of the health fund, a private long-term care insurance policy. In view of the crisis in the long-term care insurance industry of the health funds, it is recommended not to make changes to the private policy without consulting on the subject with an expert in the field of long-term care insurance.
Also, if you are faced with filing a nursing claim, it is recommended that you do not delay and file as soon as possible with the assistance of a lawyer specializing in the field of nursing, who will be able to assist in the maximum realization of your rights in the shortest period of time.