Pricier home, higher health premiums

Prices of leased dwellings paid through lump-sum deposits in lieu of rent, a system called jeonse, have soared recently, and those increases have triggered corresponding increases in health insurance premiums paid by people living in them. The subsidized health system links premiums to financial indicators such as those deposits and the type of car a person drives.

A 40-year-old self-employed businessman from Incheon moved to a new home in May and paid a jeonse deposit of 140 million won ($129,000), up from the 100 million won cost of his old residence. That bumped him into a higher property-asset value bracket, and his monthly health insurance premium rose from 88,940 won per month to 105,690 won, a 19 percent increase.

The National Health Insurance Service (NHIS) issued a report yesterday saying that in the first half of this year 123,360 households had seen their health premiums increase by the 10 percent limit on such hikes. But it also noted that the cap does not apply when people change their dwellings.

Those linkages of insurance premiums to personal wealth, with things like housing deposits and car registrations as indicators, are a system found only in Korea and Japan. The soaring cost of housing leases has meant that some people are paying as much as 20 percent more for health insurance this year.

The affected households paid an average of 53,000 won per month for that insurance, according to the report.

Another entrepreneur who retired in 2009 also saw his jeonse price increase when he moved to a new apartment in Bundang, Gyeonggi; his health insurance premiums rose from 57,000 won per month to 70,000 won. “I got a loan for the jeonse deposit of 60 million won,” he complained, “and have credit card debt of 40 million won. This is too much. I want to unsubscribe from health insurance.”

As of July, there were more than 7.48 million households who were members of the regionally-based health insurance plans. About a third are jeonse tenants, and with the increase in costs about 5 percent have seen a 10 percent or greater premium rise - either to the limit or higher if they moved during the year.

That puts an additional burden on people already hit by the rise in housing costs. The 10 percent cap, instituted last year to deflect criticism of soaring insurance premiums, has limited some of the damage, but not all of it.

BY SHIN SUNG-SIK, SARAH KIM [sarahkim@joongang.co.kr]