High-income Earner Will Pay Insurance Premium 5 Times More

People of decent income like CEOs and lawyers will have to watch their health insurance premium shot up by five times.

Currently, an employee covered by the insurance plan provided by her company is, at maximum, is presumed to earn 50 million won (or approximately $43,000) a month for the purpose of setting the premium. In the future, an employee would be assumed to earn up to 250 million won, announced Ministry of Health and Welfare and the National Health Insurance Corporation, a state-run company, yesterday.

To implement the change, Ministry of Health and Welfare plans to revise the relevant regulations early this year.

Presently, an "ordinary" worker of private companies pays an insurance premium amounting to 3.94% of her paycheck, while a person of high income exceeding 50 million won a month is deemed to earn only 50 million won. Consequently, the high-income earner pays up to approximately 2 million won a month.

The whole picture will be changed, when the presumed income limit is raised from 50 million won a month to 250 million. Under the new cap limit, a person of high income has to pay, at maximum, 5 times more than she is paying now, since the 3.94% deduction applies across the board.

The new law will affect 558 people across the nation, including chaebol owners. It is, however, expected to enrich the safe of the insurance corporation by 10 billion won a year.

For example, Samsung owner Lee Gun-hee earned an average of 350 million won a month last year, resulting in paying approximately 1.8 million won for insurance coverage. Under the new standard, he has to pay about 9.85 million won more every month.

Last year, chairman Lee Woong-ryul of Kolon, the 17th largest chaebol in South Korea, paid most among the "employees" health-covered by their companies, or 8.84 million won a month. The amount was a sum of insurance premiums paid by all of the Kolon affiliates.

In the meanwhile, the insurance corporation is conducting a probe to find out whether professionals like doctors, attorneys and CPAs are paying what they are supposed to pay. The corporation suspects that some of them are not paying enough despite high incomes they earn.

When discovered that a professional is suspected of "evading" premium payments, the insurance corporation plans to officially request the National Tax Service to conduct an investigation to figure out the exact amount of his/her income.

Sang-Keun Song songmoon@donga.com