[Major Health Insurance Premium Reform] 270,000 Dependents Who Did Not Pay Premiums Switched to Regional Subscribers

All Dependents Must Pay an Average of 149,000 KRW per Month, 1.5% of Total

[Asia Economy Reporter Kim Young-won] Mr. A receives 2 million KRW monthly from a government pension and earns 4.32 million KRW annually working as an insurance planner. He also owns land valued at 200 million KRW (property tax base 100 million KRW). Until now, Mr. A has not paid health insurance premiums as a dependent, but going forward, since his annual income exceeds 20 million KRW, he will be reclassified as a regional subscriber and must pay health insurance premiums based on his income and property.

With the second phase reform of the health insurance contribution system by the Ministry of Health and Welfare, starting this September, the income threshold for converting dependents to regional subscribers will be lowered from 34 million KRW to 20 million KRW annually. Accordingly, about 273,000 people, approximately 1.5% of all dependents, will be converted to regional subscribers and will newly pay an average of 149,000 KRW per month. A ministry official explained the background for this move, stating, "There have been ongoing concerns about fairness as some dependents who have the ability to pay were not being charged premiums."

However, to alleviate the shock caused by recent economic conditions such as inflation and the sudden burden of health insurance premiums, a phased reduction rate will be applied over four years for those converted from dependents to regional subscribers. The reduction rates are 80% in the first year, 60% in the second year, 40% in the third year, and 20% in the fourth year. In Mr. A’s case, from September, he would have to pay about 150,080 KRW monthly based on income and property, but due to the temporary reduction measure, he will receive an 80% discount, reducing his September premium to 30,000 KRW.

The property requirement for dependents will remain as is. The property tax base must be 540 million KRW or less (market value 1.3 billion KRW, official appraisal 900 million KRW). Although the 2017 agreement decided to lower the property tax base to 360 million KRW, the recent sharp rise in housing prices was taken into account. The official appraisal price of apartment complexes has increased by about 55.5% over four years since 2019.

The issue of some dependents riding free on health insurance premiums has been consistently raised. Regional subscribers earning 34 million KRW annually must pay about 210,000 KRW monthly in health insurance premiums, but if registered as dependents of workplace subscribers with annual income below 34 million KRW, they do not pay premiums. Korea’s ratio of dependents per workplace subscriber (dependency ratio) is 0.95, which is high compared to other countries. Germany’s ratio is 0.29, Japan’s 0.68, and Taiwan’s 0.49. The income criteria for dependents are also lower in Japan (about 12.78 million KRW) and Germany (7.2 million KRW) than the second phase reform plan.

The Ministry of Health and Welfare has continuously strengthened the eligibility criteria for dependents. Before the health insurance contribution system reform, siblings were recognized as dependents. Income criteria allowed financial, pension, and earned income each up to 40 million KRW annually. Following the first phase reform in 2018, siblings were excluded from dependent eligibility, and the income criterion was unified so that those exceeding 34 million KRW annually are converted to regional subscribers.