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A very important tip regarding your Bitouah Leoumi is to check that your contribution corresponds to your income level.
When you sign up for Bitouah Leoumi as a self-employed person, you need to know that it works like an insurance policy. Bitouah Leoumi determines the amount of coverage you wish to receive (the amount of your monthly income) and will then determine a "contribution premium" (the amount of your Bitouah Leoumi contribution), which will be spread over all the months during which you benefit from social coverage in Israel.
So make sure you're covered for a monthly amount that really corresponds to what you earn per month.
For example, if you contribute a monthly income of 20,000 shekels, your insurance will be calculated on this basis, regardless of your actual income. This means that if a "triggering event" occurs, your compensation will be based on this amount and will not be updated thereafter in certain cases. This is known as the "Gimla Hossemete" principle.
It's important to note that insurance coverage is essentially a matter of agreement between you and the state.
Don't reduce your Bitouah Leoumi unnecessarily
If you deliberately reduce your contributions to save money each month, you risk being under-insured. This means you may not receive adequate compensation if you need it, because the insurance will only cover the amount you actually pay in.
Some may be tempted to reduce their contributions, especially in times of economic uncertainty. However, this is not recommended, as it may result in insufficient coverage. Insurers expect you to keep your contributions in line with your actual income, so as to guarantee adequate coverage.
What's more, reducing your contributions can have a negative impact on your long-term benefits. When a triggering event occurs that entitles you to compensation, the state will base the calculation of this compensation on the amount of your contributions. If you have significantly reduced your contributions, you may not receive the compensation you need in case of need.
Being caught by the patrol.
It's also important to point out that reducing your Bitouah Leoumi contributions won't do you much good in the long run. In fact, in addition to not benefiting from social security coverage in line with your income, the fact is that when you present your annual balance sheet, you'll have to make up the missing contributions, adding interest for late payment and indexation. In some cases, the tax authorities will also apply a lump-sum fine if the reduction was unjustified.
Conclusion
In short, it makes sense to maintain contributions to the Bitouah Leoumi corresponding to your actual income.
Insurance is designed to protect you, and deliberately reducing your contributions can compromise this protection, with serious financial consequences in the event of an incident or event giving rise to compensation. (Birth, prolonged illness, temporary/permanent work incapacity, Milouim etc.).
Are you unsure about the right amount for your contribution? don't hesitate to contact us to review your situation.
