“I pay taxes, but health insurance fees are excluded”… Review of imposing health insurance premiums on separately taxable income

A plan to impose health insurance premiums on separately taxable income, such as daily earned income and some financial and pension income, is being considered.

The purpose is to resolve the equity issue of imposing health insurance premiums on the salaries of office workers and business income of the self-employed while excluding some separately taxed income.

According to the 'Major Business Progress Status' data submitted by the National Health Insurance Corporation to the National Assembly's Health and Welfare Committee audit on the 4th, the Corporation officially reported 'Promotion of imposing insurance premiums on unimposed (separate taxation) income' as a key task to improve the fairness and equity of the insurance premium burden.

Under tax law, separately taxed income is not added to comprehensive income, and tax liability is terminated through withholding tax, etc.

Currently, the National Health Insurance Corporation imposes health insurance premiums limited to certain items, such as separately taxable housing rental income (less than 20 million won per year) or financial income (interest and dividends) exceeding 10 million won per year, so the majority of separately taxable income has been left in the institutional blind spot.

The item pointed out as a representative blind spot is ‘daily earned income’. According to the Income Tax Act, daily earned income ends with a deduction of 150,000 won per day and tax withheld at the minimum tax rate (6%).

Income payment statements are submitted to the National Tax Service every month for identification, but they have been completely omitted from the standards for calculating regional health insurance premiums.

As a result, the irrationality of high-income day laborers, who earn tens of millions of won per year by moving between various fields, registered as 'dependents' on their family's health insurance and did not pay a single penny in health insurance premiums, continued.

Holes in the asset and financial sectors still remain. Profits from policy-special financial products, such as dividends from high yield funds and excess profits from individual comprehensive asset management accounts (ISA), which are subject to separate taxation under the Restriction of Special Taxation Act, have been exempt from health insurance premiums due to insufficient taxation data and lack of legal basis.

In addition, private pensions (pension savings, IRP) of less than 15 million won per year and other separately taxed income (consulting fees, manuscript fees, etc.) of less than 3 million won per case are also completely bypassing the health insurance fee imposition network.

The National Health Insurance Corporation believes that neglecting such non-tax/exemption and separate taxation income undermines the ‘income-centered levy principle’.

Accordingly, the National Health Insurance Corporation is carefully considering a plan to gradually incorporate all separately taxed labor and asset income that can actually afford to pay taxes into the health insurance premium charging system in order to balance the earned income of office workers with glass wallets and secure the financial soundness of health insurance.