Ruling Party's Kim Donga Vows to Resolve "Yellow Umbrella Health Insurance Premium Bomb"... Proposes National Health Insurance Act Amendment

"Exclude Principal Amounts Previously Deducted from Taxable Income from Health Insurance Premium Calculations"

On February 13, Kim Donga, a member of the Democratic Party of Korea, announced that he had sponsored a partial amendment to the National Health Insurance Act to address the problem of a sharp increase in health insurance premiums when small enterprises and small business owners cancel their Small Enterprise and Small Business Mutual Aid (Yellow Umbrella Mutual Aid) contracts before maturity.

Under the current law, the Yellow Umbrella Mutual Aid is operated as a social safety net system designed to support livelihood stability and business recovery when small enterprises and small business owners face threats to their livelihood due to business closure, old age, and other reasons.

Kim Donga, Democratic Party of Korea lawmaker. Yonhap News

However, when a subscriber inevitably cancels the mutual aid before maturity, the accumulated contributions and interest on which the subscriber has received income deductions are classified as other income. They are then added to the income base used to calculate health insurance premiums, causing the premiums to rise sharply as an unintended consequence.

The core issue is the controversy over double charging. During the subscription period, the subscriber has already paid health insurance premiums on the contributions paid (including the amounts for which income deductions were received. Nevertheless, when the contract is canceled, health insurance premiums are imposed once again on the principal portion of the refunded contributions that had previously received income deductions.

As a result, small business owners on the brink, who are being pushed to their limits by high interest rates and an economic downturn and are forced to cancel their mutual aid contracts against their will, end up bearing the burden of paying health insurance premiums twice.

In the amendment bill, Assemblyman Kim stipulated that, in the scope of income included in the calculation of health insurance premiums, "the portion of other income arising from the early termination of Small Enterprise and Small Business Mutual Aid contracts that corresponds to amounts previously deducted from taxable income" should be excluded.

Assemblyman Kim said, "The Yellow Umbrella Mutual Aid system is like severance pay and a last lifeline for small business owners, so it is excessively harsh to collect health insurance premiums twice from those who have no other choice but to cancel their contracts," adding, "Through this amendment, we will correct the irrational premium imposition system and improve the制度 so that the state can provide practical support for the recovery and livelihood stability of small business owners."

Meanwhile, this amendment bill reflects and legislates the voices from the field that emerged at the "Democratic Party of Korea–Korea Federation of SMEs Legislative Agenda Town Hall Meeting" held in December last year.

This content was produced with the assistance of AI translation services.