Some 6,000 of the country's neediest Holocaust survivors who were due to be reimbursed for their medical expenses will not receive the money due to a budget shortfall of NIS 20 million at the Foundation for the Benefit of Holocaust Victims in Israel.

The foundation will also stop accepting new applications for reimbursement of medical expenses from some Holocaust survivors this week. The problem affects aid from a certain channel administered by the foundation for the urgent medical requirements of the neediest survivors. The aid channel had been used to reimburse survivors whose total monthly income, including all pensions, compensation payments and government allowances, does not exceed NIS 8,158. Survivors who met this criterion were able to apply for reimbursement of an average of NIS 3,300 per person on expenses like dental care, prescription eyeglasses and hearing aids. In 2012, the foundation has reimbursed 9,100 eligible recipients from this channel.

The shortfall means that 6,000 survivors whose applications have been approved, plus an unknown number of potential applicants whose requests will not be processed, will have to pay for all these expenses by themselves.

While most of the foundation's budget comes from the Conference on Jewish Material Claims Against Germany, 30 percent is from Israel's state budget. The urgent cases aid channel, however, is funded entirely out of the state budget. This allocation declined from around NIS 46 million in 2011 to NIS 32 million in 2012.

Finance Ministry officials attribute the cut in funding to an agreement signed with the country's health maintenance organizations that gives Holocaust survivors discounts on prescription drugs, with the intention of eliminating the need for reimbursement through the foundation. Officials at the foundation, however, argue that the savings made as a result of this arrangement are more than offset by the growing number of survivors who qualify for the reimbursements, as well as the rise in medical expenses for each survivor as their age advances.

"Early this year we estimated there would be a shortfall," foundation director Rony Kalinsky said. "We appealed to the Knesset Labor, Welfare and Health Committee, which called on the prime minister and the finance minister to restore the allocations, but nothing was done.

"We recently submitted updates on the NIS 20 million shortfall," he added. "That is the current gap: Every day the shortfall increases by an additional half a million shekels."