KCCI "Long-term Care Insurance Premiums Should Be Frozen Next Year... Increasing Them Will Only Add to Household Burden"

[Asia Economy Reporter Su-yeon Woo] The Korea Employers Federation (KEF) argued that the burden capacity of companies and households is at its limit due to the novel coronavirus infection (COVID-19), and that next year's long-term care insurance premiums should be frozen.

According to KEF on the 6th, next year's long-term care insurance premiums have already increased by 5.28% due to the health insurance premium rate hike (2.89%) and the reflection of natural wage increases. They expressed the opinion that any additional increase in long-term care insurance premiums would further burden the premiums actually paid by subscribers.

KEF stated, "Increasing the long-term care insurance premium rate further in the current situation would not only impose an excessively harsh burden on subscribers but also shift the financial burden caused by the government's policy to expand coverage onto companies and households."

They added, "The Ministry of Health and Welfare should no longer seek to cover insurance finances by raising premiums without regard to the pure insurance premium payers' financial circumstances. Instead, the payers' ability to bear the burden must be prioritized."

The government is considering a plan to raise the insurance premium rate by more than 10% next year at the Long-term Care Committee meeting scheduled for the 8th to cover the finances of long-term care insurance. As of last year, the accumulated reserve fund of long-term care insurance was 709.7 billion KRW, which is only 9.5% of the annual expenditure of 8.2 trillion KRW, putting it at risk of financial depletion. The long-term care insurance premium rate for this year (2020) increased by more than 20.45% compared to the previous year, and the government is planning to raise it by more than 10% this year as well.

KEF said, "Over the past three years (2018?2020), the long-term care insurance premium rate has increased by 56.5%, and considering the health insurance premium hikes and natural wage increases during this period, the actual burden increase for workplace subscribers reaches 84.1%. From the perspective of companies, who are the pure burden bearers, further increases are difficult to accept."

Long-term Care Insurance Premium Rate and Year-on-Year Increase Rate / Source=Korea Employers Federation

Long-term care insurance premiums are determined by multiplying income (monthly wage) by the health insurance premium rate and the long-term care insurance premium rate. Since both income and health insurance premium rates increase annually, this structure multilayeredly intensifies the burden of premiums actually paid by subscribers.

The long-term care insurance premiums actually paid by workplace subscribers increased from an average of 13,303 KRW per month in 2017 to an estimated average of 24,493 KRW per month this year, resulting in an 84.1% increase over the past three years.

On the 27th of last month, the health insurance premium rate increase for next year was set at 2.89%. Assuming that workers' income (monthly wage) increases by the three-year average annual rate of 2.36% from 2017 to 2019, even if the long-term care insurance premium rate is frozen next year, the premiums actually paid by workplace subscribers are expected to automatically increase by 5.28%.

KEF stated, "Next year's long-term care insurance premium rate should be frozen to minimize the burden on companies and the public. At the same time, the expenditure structure should be reformed through gradual adjustment of beneficiary age criteria, reexamination of coverage levels, and improvement of care management systems, while expanding government treasury support to pursue fiscal soundness."

This content was produced with the assistance of AI translation services.