Will Health Insurance Premiums Rise Next Year After Five Years of Surplus End? ... Additional Premiums for Interest and Dividend Income Possible [Why&Next]

Deficit After Six Years Becomes Reality
Spending Pressures Mount from Aging Population and Healthcare Reform
Government Weighs Overhaul of Premium Assessment System
Cumulative Shortfall in National Subsidies Nears 22 Trillion Won
Focus

After posting a surplus for five consecutive years, the National Health Insurance program recorded a deficit of nearly 3.9 trillion won in just the first quarter of this year, making a full-year deficit virtually inevitable. While the Health Insurance financial reserves are not yet depleted, alarm is growing that this worsening fiscal situation is not a temporary phenomenon. This is because medical expenditures are rapidly increasing due to an aging population, while the number of working-age people who pay insurance premiums is on the decline.

According to data released by the National Health Insurance Service on August 14, this year’s first-quarter cash-based revenue was 22.4416 trillion won, while expenditures stood at 26.3405 trillion won, resulting in a quarterly deficit of 3.8989 trillion won. The accumulated reserves fell from 30.2217 trillion won at the end of last year to 26.3228 trillion won.

This is the first time in six years that the Health Insurance has posted a quarterly deficit, following the deficits recorded between 2018 and 2020. After returning to a surplus in 2021, the fund maintained a surplus for five consecutive years, but the amount has been steadily shrinking: 4.1276 trillion won in 2023, 1.7244 trillion won in 2024, and 499.6 billion won in 2025.

The Ministry of Health and Welfare maintains that it is difficult to definitively characterize this year’s first-quarter deficit as signaling a full-year fiscal deterioration. The ministry cited seasonal factors, explaining that government subsidies tend to be lower in the first quarter, often resulting in a deficit during that period, and that additional insurance premiums from year-end tax settlements for workplace subscribers are usually reflected in the second quarter. For the first half of this year, the ministry added, the current account balance actually showed a surplus of approximately 1.3 trillion won.

The concern lies in the fact that this trend aligns with earlier, more pessimistic forecasts. When the Ministry of Health and Welfare formulated the 2nd Comprehensive National Health Insurance Plan in 2024, it anticipated that the health insurance account’s current balance would turn negative in 2026. Similarly, in September last year, the Financial Operations Committee of the National Health Insurance Service predicted that this year’s deficit would persist going forward. The National Assembly Budget Office also projected that the National Health Insurance would fall into deficit in 2026, and if additional financial outlays for medical reform are factored in, the depletion point for accumulated reserves could move up two years to 2029, rather than 2031.

Will the Health Insurance Premium Rate Increase Next Year?

As a result, there is growing speculation that the government will raise next year’s health insurance premium rate. The government typically convenes a Health Insurance Policy Deliberation Committee in late August to finalize the rate for the following year, factoring in negotiated claims, economic growth rate, inflation, and minimum wage trends. The premium rate was frozen for two consecutive years, 2024 and 2025, for the first time in history, but rose 1.48% this year to 7.19%. In 2026, the average monthly insurance premium will be 160,699 won for workplace subscribers and 90,242 won for self-employed (regional) subscribers.

One proposal under discussion is to strengthen the premium assessment for workplace subscribers who earn additional income outside of their salary, such as interest, dividends, rental, or business income, by lowering the current deductible amount from 20 million won to 10 million won. The deductible limit for non-salary income for employees has already dropped several times: from 72 million won in September 2012 to 34 million won in July 2018, and to 20 million won in September 2022. In addition to this, proposals are being considered to raise the minimum insurance premium for both workplace and regional subscribers in line with the minimum wage, and to adjust the upper premium cap for very high-income subscribers. The government expects that these changes in the premium assessment system would secure an additional 1.3 trillion won per year.

Government Subsidies Remain Insufficient...Fiscal Control Faces a Test

Another recurring issue whenever premium hikes are discussed is the government’s fiscal responsibility for the National Health Insurance program. By law, the government is required to support the National Health Insurance fund each year with an amount equivalent to 20% of the expected annual insurance premium revenue—14% from general accounts and 6% from the National Health Promotion Fund.

However, actual government subsidies have not met these statutory requirements. According to the office of Jeon Jin-suk, a member of the National Assembly Health and Welfare Committee from the Democratic Party, the cumulative gap between the legally required and actual government contributions from 2007 through 2024 amounted to approximately 21.7 trillion won. This year as well, government funding is expected to fall short of the legal mandate, potentially increasing the accumulated deficit to around 22 trillion won.

Ensuring the sustainability of the National Health Insurance fund will require not only increased revenue, but also stricter expenditure control. In its operating roadmap for this year, the National Health Insurance Service identified securing sustainability as a core priority, outlining careful expenditure management, fostering a sound healthcare utilization culture, rational qualification and assessment systems, and efficient collection management as key objectives. The Ministry of Health and Welfare announced plans to intensively crack down on fraudulent medical claims and fake patients in the second half of the year. It also intends to reclassify certain non-reimbursed services, such as manual therapy, into managed reimbursements to better regulate usage volume and pricing.

Jeong Jaehun, professor in the Department of Preventive Medicine at Korea University College of Medicine, warned, “As Korea quickly enters a super-aged society, the share of current health expenditures as a percentage of gross domestic product is projected to reach about 20% by 2060. To maintain equilibrium, the health insurance premium rate, currently in the 7% range, would need to rise to 14.39% over the same period. Unless we spend less and collect more, the health insurance system will not survive.”

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