Higher premiums for rich, eased for those with jeonse

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Higher premiums for rich, eased for those with jeonse


High-income earners will pay higher health insurance premiums while lower-income earners living in homes on jeonse or wolse will see their payments eased, the Ministry of Health and Welfare announced yesterday in an effort to achieve more “balance” in the nation’s health insurance system.

From September 2012, those with employer-based health insurance policies will see an increase in their health insurance premiums if they have outside sources of income totaling more than 70 to 80 million won ($62,000 to $70,900) per year.

Meanwhile, only 10 percent of a hike in rental deposit will be taken into account to calculate monthly health insurance premiums for those with regional health insurance policies who live in homes with jeonse or wolse. The base rental deposit used to calculate monthly premiums will be reset every two years.

Until now, tenants with regional health insurance policies have been paying health insurance premiums in direct proportion to their rental deposits - a heavy financial burden for many as rental deposits across the country have skyrocketed. The National Health Insurance program has been criticized for being “unfair” because both upper-income and low-income brackets have paid a similar amount in health insurance premiums as long as they had employer-based health insurance policies. Employees only pay half of the 5.64 percent from their monthly paycheck for health insurance while the company pays for the other half.

The system had also come under criticism for being abused by high-income earners. The ministry said it found 1,103 high-income earners last year who avoided higher premiums by registering as an employee at companies owned by family or friends.

Under the ministry’s new regulations, an employee with employer-based health insurance who also makes more than 88 million won a year from other sources would see his monthly premium rise to 582,000 won on average. There are currently 1.53 million people with more than one source of income, 30,000 of them making more than 88 million won.

“The bill imposing higher premiums on employees with additional income is currently pending at the National Assembly. However, if the bill gets passed in the next regular session of the National Assembly, the new system will take effect starting next September,” said Choi Hee-joo, an official from the ministry’s health insurance policy department. “We will start revising the related ordinance on easing health insurance burden for tenants so that it can be implemented early next year.”

By Yim Seung-hye [sharon@joongang.co.kr]
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