Health insurance: understanding Israel's coverage system
Israel's health insurance system has three layers: the state health basket, supplementary health-fund insurance and private insurance, each with different coverage, limits and costs. This page explains how the layers complement one another, which coverage to check, and how to avoid duplication and build medical protection that suits your needs.
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Health is one of the central issues in life, but it is also an area where expenses can become very high when a serious illness or complex treatment is involved.
The three layers of health insurance in Israel
Israel's healthcare system is built like a "layer cake." Everyone has the state's basic layer, most people add the health-fund layer, and some choose to add a private layer. In this chapter, we will clarify these layers, understand how the reform affects your finances and see how to build health coverage without wasting money.
1. State health insurance: the system's foundation
State health insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment. is provided automatically to every Israeli resident, regardless of age, health or financial situation.
It includes a wide range of medical services, such as:
- Hospitalization
- Outpatient treatment that does not require hospitalization
- Medicines included in the state health basket
- Laboratory services and medical tests
The state updates the health basket from time to time according to medical developments and the public budget.
2. Health-fund supplementary insurance, SHABAN
The health funds offer supplementary insurance known as additional health services, or SHABAN (שב״ן).
This insurance supplements the state basket and provides additional services, for example:
- Private surgery in Israel and abroad
- Medicines not included in the state health basket
- Dental treatment
- A second opinion
- Complementary medicine
- Various medical devices
The supplementary-insurance premiumThe periodic payment made to the insurance company. is determined mainly by the insured person's age, plan type and included coverage.
Most people in Israel hold this type of supplementary insurance.
3. Private health insurance
Insurance companies offer private health insurance as another layer above state and health-fund supplementary coverage.
Private insurance has three types of coverage:
- Additional insurance: Coverage that does not exist at all in the basic basket or SHABAN.
- Substitute insurance: Replaces coverage available in the basket or SHABAN, paying from the first shekel.
- Supplementary insurance, supplementary SHABAN: Completes the coverage available in the lower layers. The private insurer deducts amounts paid by the health fund for the same case.
Private insurance provides:
- Transplants and special treatments abroad
- Medicines not included in the state health basket
- Surgery and surgery-replacement treatments abroad
The scope of coverage and the price vary between insurers and policies.
The health insurance reform
For many years, a large part of the Israeli public held two health policies at the same time, supplementary health-fund insurance and private insurance, although some coverage overlapped.
A reform intended to reduce this duplication took effect in 2023.
The reform moved some insured people from "first-shekel" insurance to supplementary SHABAN insurance.
The main difference between the two tracks
- Supplementary SHABAN: Private insurance enters only after you have exhausted your health-fund rights. It is a cheaper track that prevents duplicate insuranceA situation in which multiple policies cover the same risk, resulting in unnecessary premium payments..
- First-shekel coverage: Private insurance pays everything from the beginning, regardless of the health fund. It is more expensive and provides complete independence, but does not include a deductibleThe initial amount the insured pays out of pocket when making a claim..
As part of the reform, the state also sought to reduce the number of surgeons working only with insurance companies so that they would also work with health funds.
Differences in medical coverage
The three insurance layers differ substantially in some areas.
Comparison of the three insurance layers
| Coverage area | Public system, state health basket | Supplementary insurance, health fund | Private health insurance, insurance companies |
|---|---|---|---|
| Medicines | Only medicines in the state basket | Discounts on certain medicines outside the basket | Broad coverage for expensive medicines and personalized treatment |
| Transplants and treatment abroad | Limited funding subject to strict committees | Some expansion of funding and expense reimbursement | Broad coverage for global surgeons and centers, including support and flights |
| Surgery in Israel | In a public hospital | Choice from a list of contracted surgeons, with a deductible | Very broad choice of surgeon and private hospital, without depending on a contract |
| Surgery abroad | Only in rare cases with no alternative in Israel | Partial subsidy for certain surgery abroad | Broad coverage for surgery abroad |
Critical illness insurance
Insurance companies also offer critical illness insurance.
This insurance pays a one-time financial benefit, a cash amount, when an illness defined in the policy is diagnosed. Its purpose is to provide the family with a financial cushion during a period of lower income and higher expenses related to the illness.
This insurance is relatively expensive, so carefully check which illnesses are covered and the conditions for receiving payment.
Medical service plans
In addition to health insurance, private insurers also offer medical service plans.
These are addenda to health insurance that may include, for example:
- Fast MRI and CT tests
- Comprehensive dental treatment
- Screening tests for early detection of illness
- An accompanying physician
- Various pregnancy tests
- Treatment using advanced technologies and medical devices
- Medical support and treatment during a substantial medical event such as surgery, hospitalization or serious illness
- Hospitalization at home
Important points before switching insurance
If you are considering changing insurers, note the following:
- Existing medical condition: A health change since the previous policy may lead to exclusions in the new one.
- Qualifying periodA period from the start of the insurance during which the insured is already paying premiums but is not yet entitled to compensation.: Make sure you understand how long passes from buying the policy until you can use the coverage.
- Medical underwriting: Switching requires a new health declaration that determines your acceptance terms.
Health insurance comparison calculator: compare before buying
Before buying health insurance or moving to another insurer, it is advisable to use the health insurance comparison calculator provided by Israel's Capital Market Authority. It lets you compare policies from different companies, examine the scope of coverage and obtain a clear picture of the expected costs. An organized comparison can help you understand what you receive for your money and avoid making a decision based only on an agent's recommendation or advertisement.
Frequently asked questions
What is the main difference between SHABAN and private insurance?
Health-fund SHABAN is limited to the fund's lists of doctors and arrangements, while private insurance provides greater flexibility and broader coverage for medicines and transplants.
In summary
Managing health coverage correctly means balancing the protection provided by the state with the peace of mind of private insurance. Once you understand the "layer cake," it is much easier to make informed decisions and prevent unnecessary duplicate insurance.