[Major Health Insurance Premium Reform] Retired Public Official with 500 Million Won House and 35 Million Won Car, Health Insurance Premium Reduced from 214,000 Won to 172,000 Won

How Will the Health Insurance Regional Subscriber Contributions Change?

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#Mr. A (36, male), residing in Chungcheong Province, has an annual business income of 7.2 million KRW (600,000 KRW per month) and lives in a house valued at 360 million KRW (officially assessed land price 250 million KRW, taxable property value 155 million KRW) with a mortgage loan of 100 million KRW. Currently, he pays a total monthly health insurance premium of 185,000 KRW, combining 76,000 KRW for income and 109,000 KRW for property. However, starting this September, the insurance premium on income will be reduced to 42,000 KRW per month, and the premium on property will be lowered to 60,000 KRW per month, reducing the total monthly health insurance premium to 102,000 KRW.

#Ms. B (68, female), a retiree living in Busan, owns a house worth 500 million KRW (officially assessed land price 350 million KRW, taxable property value 210 million KRW) and a one-year-old car valued at 35 million KRW (2495cc). She receives a public official pension of 21.6 million KRW annually (1.8 million KRW per month) and currently pays a total health insurance premium of 214,000 KRW monthly, which includes 192,000 KRW for income and property and 22,000 KRW for the car. However, going forward, the health insurance premiums on property and income will decrease, and the premium on the car will be eliminated, so she will only need to pay 172,000 KRW per month.

When the second phase of the National Health Insurance reform is implemented this September, 5.61 million households and 9.92 million people, accounting for 65% of regional health insurance subscribers, will see their premiums decrease by 24% (36,000 KRW), from the current monthly average of 150,000 KRW to 114,000 KRW. Overall, the total health insurance premium burden for regional subscribers is estimated to be reduced by about 2.4 trillion KRW annually.

The government will first lower the health insurance premium burden for households owning houses or land among regional subscribers by uniformly increasing the basic property deduction from the current 5 million to 13.5 million KRW to 50 million KRW (equivalent to a market value of about 120 million KRW). For example, if a household owns a house valued at 360 million KRW with an official land price of 250 million KRW, the taxable property value is 150 million KRW. After deducting the basic exemption of 50 million KRW, health insurance premiums will be charged only on the remaining 100 million KRW.

With this reform, 37.1% of regional subscribers currently paying property-based health insurance premiums will be exempted from this burden. The proportion of households paying property-based premiums among all regional subscribers will decrease from the existing 60.8% (5.23 million households) to 38.3% (3.29 million households).

The average monthly property-based premium per household among all regional subscribers will also decrease from 51,000 KRW to 38,000 KRW. This will result in an overall annual reduction of 1.28 trillion KRW in health insurance premium burdens.

Additionally, according to the National Health Insurance Act amendment passed at the Cabinet meeting the day before, households with a single residence and housing debt for actual residence purposes, or households without a house, among regional subscribers will receive an additional deduction on their debt amount, further reducing their property-based health insurance premium burden.

From September, health insurance premiums on cars will no longer be charged for vehicles valued under 40 million KRW or with engine displacement under 1600cc. Cars that were initially valued over 40 million KRW at purchase but have since depreciated below 40 million KRW will also be excluded from premium charges. As a result, the number of cars subject to health insurance premiums will drastically decrease from the current 1.79 million to 120,000 starting in September.

The current method of calculating health insurance premiums for regional subscribers, which divides income into 97 grades and assigns scores accordingly, will be improved. Like workplace subscribers, a fixed percentage of income (income rate system) will be charged as the premium. Under this system, households with a comprehensive income of 38.6 million KRW or less annually will see a reduction in income-based premiums. For example, a regional subscriber with an annual income of 5 million KRW currently pays 50,290 KRW monthly for income-based health insurance premiums, but from September, they will only pay 29,120 KRW, which is 6.99% of their income (2022 insurance rate).

For regional subscribers receiving public pension income such as the National Pension, government, military, or private school pensions, or those with temporary earned income, the premium calculation will change from charging 30% of income to 50%. A Ministry of Health and Welfare official explained, "50% of public pension income is the individual's contribution, and for workplace subscribers, 50% is borne by the employer. Considering this, only 50% of income was reflected for regional subscribers as well."

However, even with this adjustment, most pensioners with annual pension income below 41 million KRW will not see an increase in income-based health insurance premiums. This is because the premium reduction effect from the introduction of the income rate system offsets the premium increase from the higher pension income assessment rate.

The minimum health insurance premium for regional subscribers will be unified from the current 14,650 KRW to 19,500 KRW, the same as that for workplace subscribers. However, considering the increase in premiums for low-income groups and recent economic conditions such as inflation, the premium increase for 2.42 million households will be fully waived for the next two years and then temporarily reduced by 50% for the following two years.

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