If You Pay Employees More Than the Owner, Prepare for a 'Health Insurance Premium Bomb'... Reverse Discrimination Controversy

176,000 Private Business Owners Hit with Health Insurance "Premium Bomb"

Cases of Premiums 77 Times Higher Than Actual Income

Honest Reporters Face Greater Disadvantages

It has been revealed that owners of sole proprietorships who set salaries for high-performing employees that exceed their own are being hit with 'health insurance premium shock' that far surpasses their actual income. Critics argue that the system, which was introduced to prevent business owners from intentionally declaring lower personal salaries to avoid health insurance contributions, has created a regulatory paradox by imposing excessive financial burdens.

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According to data submitted to Assemblywoman Kim Sunmin of the Grand Innovation Party by the National Health Insurance Service on July 14, there were 176,022 sole proprietorship representatives in 2025 who were charged health insurance premiums in this manner.

Article 38, Paragraph 3, Item 1 of the current Enforcement Decree of the National Health Insurance Act stipulates that if the owner's monthly income at a business is less than that of the highest-paid employee, the health insurance premium must be calculated based on the highest-paid employee’s income. This system was introduced to block business owners from deliberately underreporting their income to evade health insurance premiums.

Paradox: Paying Hundreds of Thousands More in Premiums for Rewarding High-Performing Employees

However, as an increasing number of owners are offering higher salaries than their own to attract top talent, negative side effects are on the rise. Owners are being forced to pay health insurance premiums hundreds of thousands of won higher than they would owe based solely on their actual income.

For example, in a 2025 case, the owner of company A, which operates in the healthcare sector, originally earned a monthly income of 23,206,100 won, resulting in a monthly health insurance premium of about 822,656 won. However, because the highest-paid employee’s monthly income at this company reached 140,545,716 won, the owner’s health insurance premium soared to 4,504,170 won. This amount reflects the cap on insurance premiums for the previous year.

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At company B, a legal services firm, the owner’s monthly income was 127,725,740 won, but with the highest-paid employee earning 230,457,675 won, the owner was also assessed a premium of 4,504,170 won. Meanwhile, at company C, also in the healthcare sector, the owner’s monthly income was only 1,666,666 won, which would normally result in a premium of 59,083 won. However, with the highest-paid employee earning 90,914,811 won, the owner was instead charged a monthly health insurance premium of 3,222,930 won.

'Maximum Premium Bomb' for Honest Reporters, 'Average Premium Benefit' for Non-Submitters

The bigger flaw in this system is that honest business owners who accurately report their income suffer 'maximum premium bombs,' while those who withhold data benefit, resulting in a loss of legal equity. Under the current framework, owners who do not report income data at all, or who fail to submit objective tax documentation verifying actual income, have their health insurance premiums calculated based on the average salary of all employees, rather than the highest-paid employee. As a result, owners who report incomes honestly and reward top talent suffer the maximum premium, while those who intentionally delay or omit income submissions enjoy the benefits of an 'average premium,' creating both moral hazard and reverse discrimination.

The number of owners assessed premiums based on the maximum monthly compensation was 227,936 in 2023, increased to 231,726 in 2024, and then reached 176,022 in 2025. In contrast, those subject to the average wage calculation, due to non-submission of income data, amounted to 78,093 in 2023, 77,953 in 2024, and 18,489 in 2025.

Assemblywoman Kim pointed out, "Because of this health insurance premium situation, employers find it difficult to offer higher salaries to high-performing employees." She continued, "Even if an employer’s monthly income is lower than an employee’s, the calculation of health insurance premiums should be based on actual income." She further emphasized, "If the Ministry of Health and Welfare is willing, the problem could be resolved immediately by amending the enforcement decree—and if necessary, I will also promote a revision to the law itself."

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