Whether Driving a Morning Taxi or a Porsche... No Differentiation in Health Insurance Premiums Based on Vehicle Type

The World's Only Automobile Health Insurance Levy Set for Abolition
"Cars Establish Themselves as Necessities, Not Luxuries"

The insurance authorities are pushing for a plan to eliminate the insurance premiums imposed on cars owned by regional health insurance subscribers.

South Korea is the only country in the world that includes automobiles in regional health insurance premiums

According to the Ministry of Health and Welfare and the National Health Insurance Service on the 13th, internal discussions are rapidly progressing toward excluding automobiles from the premium calculation for regional subscribers. The reason is that cars are not luxury goods but essential daily necessities, and South Korea is the only country in the world that imposes regional health insurance premiums on automobiles.

There is speculation that a related amendment to the Enforcement Decree of the Health Insurance Act may be announced for legislative notice as early as this year.

An official from the Health Insurance Policy Division of the Ministry of Health and Welfare said, "Several experts have expressed opinions that the health insurance premiums imposed on automobiles owned by regional subscribers should be abolished, and we are carefully discussing the abolition plan internally."

Moon Sim-myeong, a legislative researcher at the National Assembly Legislative Research Office, argued in the report titled "Directions for Enhancing the Fairness and Equity of the Health Insurance Premium Imposition System," "There is no precedent worldwide for imposing premiums on automobiles. While cars may have been luxury items in the past, they are now universally owned essential daily necessities, so imposing premiums based on income is completely inappropriate."

He emphasized, "Considering that the proportion of automobiles in the total regional insurance premiums is low, it is necessary to consider excluding them from the premium calculation."

Criteria for imposing premiums on regional subscribers include property and automobiles... "Issues of fairness and equity"

Currently, South Korea's health insurance premium system is dual-structured.

For workplace subscribers, premiums are imposed only on income (including income other than salary) according to the premium rate, but for regional subscribers, premiums are imposed by scoring not only income but also property (including jeonse and monthly rent) and automobiles, and applying a unit price per score.

During the expansion of the health insurance system to rural areas in 1988 and urban areas in 1989, it was difficult to grasp the income of self-employed people who make up a large portion of regional subscribers, so property and automobiles were used as criteria for premium imposition to estimate income.

This dual basic framework has undergone several revisions and supplements but has been maintained as is.

As a result, issues of fairness and equity have continuously arisen.

From the principle of "imposing premiums where there is income," premiums are imposed on the property and automobiles of regional subscribers, which are unrelated to income, while dependent family members with income ride free without paying any premiums by being covered under workplace subscribers, causing ongoing complaints about "free riding."

[Image source=Yonhap News]

In response, the government carried out the first phase of reform of the health insurance premium system in July 2018 following bipartisan agreement in the National Assembly, and the second phase of reform in September 2022, reducing the premiums imposed on property and automobiles of regional health insurance subscribers.

The automobiles subject to premium imposition were limited to vehicles with engine displacement of 1600cc or more or a value of 40 million KRW or more, and premiums were imposed only on vehicles valued at 40 million KRW or more regardless of engine displacement. Vehicles were excluded from premium imposition if their value dropped below 40 million KRW after purchase, even if originally bought at a price above 40 million KRW.

Through this measure, the number of automobiles subject to health insurance premiums decreased from 1.79 million to about 120,000.

At that time, the Ministry of Health and Welfare stated that additional reforms, including the abolition of automobile insurance premiums, would be decided after gathering opinions through social discussion bodies such as the Health Insurance Premium System Reform Committee. However, it was reported that specific related schedules had not been decided because abolishing automobile insurance premiums requires amending the Enforcement Decree of the Health Insurance Act.

Meanwhile, through the 3rd Comprehensive Plan for Basic Livelihood Security (2024?2026), the Ministry of Health and Welfare has significantly relaxed the criteria for calculating automobile property when selecting recipients of basic livelihood security benefits. Previously, 50% of the income was calculated for vehicles used for livelihood, but now they are completely excluded, and the standard for livelihood-use automobiles has been expanded from under 1600cc to under 2000cc.

For multi-person (6 or more) and multi-child (3 or more children) recipient households, the general property conversion rate (4.17%), which was applied only to passenger cars under 1600cc, has been extended to cars under 2500cc.

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