South Korea Considers Raising Health Insurance Premiums Amid Projected Budget Deficit

South Korea is considering an increase in health insurance premiums for approximately 1.78 million employees who earn income outside of their primary salaries, according to reports from the National Health Insurance Service (NHIS). The move comes as the government anticipates a shift toward a deficit in the national health insurance fund, prompting a review of “income-based premiums” (소득월액보험료) for those with significant non-salary earnings.

Under current regulations, employees pay premiums based on their monthly salary. However, if an individual’s additional income—such as interest, dividends, rental income, or business profits—exceeds 20 million won annually, they are subject to an additional premium. The Ministry of Health and Welfare is evaluating whether to adjust these thresholds or rates to stabilize the insurance fund’s financial health as healthcare costs rise across the peninsula.

Financial Pressures on the National Health Insurance Fund

The primary driver for this policy review is the projected deficit of the health insurance treasury. According to the National Health Insurance Service (NHIS), the fund faces mounting pressure from an aging population and the expanded coverage of high-cost medical treatments. As the number of elderly citizens utilizing healthcare services increases, the expenditure gap has widened, necessitating a search for new revenue streams beyond standard payroll taxes.

Government officials are specifically targeting “income-based premiums” to ensure a more equitable distribution of the financial burden. Currently, 1.78 million workers fall into the category of having “extra-salary income” that triggers additional payments. By adjusting how these premiums are calculated or increasing the rates, the government aims to capture more revenue from high-earners who derive significant wealth from assets rather than just their monthly paychecks.

Who is Affected by Income-Based Premiums?

The proposed changes primarily affect “employee subscribers” who have diversified income streams. In the South Korean system, health insurance is split between employee-based and regional-based subscriptions. While most workers only pay based on their salary, those with substantial outside income are treated similarly to regional subscribers for that specific portion of their wealth.

The current threshold for this additional premium is an annual non-salary income of 20 million won. If a worker earns 30 million won in dividends or rent per year, the 10 million won exceeding the threshold is used to calculate the additional premium. The Ministry of Health and Welfare is examining whether this 20 million won limit is too high or if the premium rate itself needs to be hiked to address the fund’s shortfall.

For the 1.78 million affected individuals, an increase in these premiums would mean a direct reduction in take-home pay from their secondary income sources. This is part of a broader effort to close “loopholes” where individuals with high total wealth but modest official salaries pay disproportionately low premiums compared to their actual economic capacity.

Comparative Impact on Different Income Groups

The shift toward stricter income-based premiums creates a distinct contrast between standard salaried workers and those with “hybrid” income profiles. While a typical office worker with no outside assets would see no change in their premiums, the “wealthy employee” class—including landlords and stock investors—would face higher costs.

This policy aligns with recent trends in South Korean healthcare policy to shift the burden toward those with higher “ability to pay.” By focusing on non-salary income, the government avoids a blanket increase in payroll taxes, which would affect the entire working population and potentially trigger inflation or labor unrest. Instead, the focus remains on the 1.78 million people whose total financial footprint exceeds the current thresholds.

Next Steps for Implementation

The Ministry of Health and Welfare has not yet finalized the exact percentage of the increase or whether the 20 million won threshold will be lowered. The decision will likely follow a series of reviews by the Health Insurance Policy Deliberation Committee, which assesses the financial impact and social equity of premium changes.

Once the committee reaches a consensus, the updated premium rates will be announced via official government gazettes and the NHIS portal. Affected employees will typically receive notification of their adjusted premiums through their employers or via direct mail from the insurance service.

The next confirmed checkpoint for this policy will be the upcoming quarterly financial review of the NHIS, where the exact scale of the projected deficit will be detailed to justify the specific rate of the premium hike.

For the latest updates on health insurance regulations and premium calculations, readers are encouraged to visit the official National Health Insurance Service website. Share this report with colleagues who may be affected by non-salary income premium adjustments.