What is Social Security Payment Co-ordination ?
This is called Teum Dmei Bituach Leumi in Hebrew. There are two stages for calculating Social Security and Mandatory Health tax that are automatically deducted from employees’ gross pay. The first stage or reduced rate is 0.4% for Social Security and 3.1% for Health Tax up to a ceiling of 4,809 shekels (Jan 2010)
Any income over this amount, the deductions rise significantly to 7% for Social security and 5% for Health Tax.
If someone is employed by several employers, they will need to have a payment co-ordination done (in addition to the better-known tax co-ordination) in order to avoid paying the higher rates from the first shekel for income earned from the additional employer, as it is possible that there is unutilized portion of the 4,809 shekels that the additional employer can use for the reduced rates.
Who needs to do s.sec co-ordination ?
If a person is employed by more than one employer they will usually need a s.sec. co-ordination.
How do i get a Social Security Co-ordination ?
Up until Dec 2009, anyone who declared on their annual 101 tax form that they have additional income, was required to apply at their local Social Security office for a Co-ordination. If the employee didn’t bother doing it, the employer automatically deducted the higher rates from the first shekel.
Do to a change in the Social Security laws, effective January 1, 2010, the additional employer is allowed to do the co-ordination himself, on several conditions, thus eliminating the need for the employee to take time off work and go in to the Social Security office.
What are the conditions that allow an additional employer to do the co-ordination ?
1. The employee must fill out a declaration via a 644 form (available on the Social Security website – www.btl.gov.il)
I advise using the Hebrew site and not the English as the form doesn’t appear there yet. It is a PDF file that can be downloaded.
The 644 form is a declaration which states the employee’s last gross pay from his main employer.
note: if the pay is over the ceiling (4,809 shekels) this is irrelevant as he has utilized the full amount at the reduced rate and therefore all pay from the additional employer will be at the higher rates.
2. If the employee works for more than 2 employers or he earns more than 75,000 shekels per month, he will need to apply personally at the Social Security office and this form is irrelevant for him.
This declaration needs to be renewed annually along with the 101 tax form and tax co-ordination forms.
What happens to the money I overpaid in previous years ?
While there is a chance that you paid too much money via the Social Security and Health Tax deductions on their payslip from the additional employer, this needs to be checked out individually. You will need to write a letter to Social Security requesting a refund.
How can I know if I was overcharged ?
It is advisable to have this pre-checked by a payroll professional. This is one of the paid services Israpay offers. Interested employees should send an email toMoshe@Israpay.com with their name and contact information
