How Health Insurance and National Pension Contributions Are Calculated and How to Pay Less

TLDR;

1. Health insurance and the National Pension are divided into employee subscribers and regional subscribers.
2. Employee subscribers pay contributions based on their monthly salary, while regional subscribers pay based on their income and assets.
3. If your contribution burden grows after leaving your job, you can reduce it by using the voluntary enrollment system and the payment exemption system.

Employee Subscribers vs. Regional Subscribers

Health insurance is divided into employee subscribers and regional subscribers, and the way contributions are calculated differs accordingly. Employee subscribers pay contributions based on their monthly salary, splitting the cost 50/50 with their company. Regional subscribers, on the other hand, have their contributions calculated based on their income and assets.

In the end, even if two people earn the same amount, there is a difference in contributions between the two groups.

Calculating Health Insurance Contributions for Employee Subscribers

Health insurance contributions for employee subscribers consist of a wage-based contribution (on the monthly wage amount) and an income-based contribution (on the monthly non-wage income amount).

The wage-based contribution is calculated by multiplying your monthly wage by the contribution rate (6.99% = 3.495% paid by you + 3.495% paid by the company), and the monthly wage amount is your total annual pay divided by the number of months worked.

The income-based contribution is calculated on income other than your wages: KRW 20,000,000 is deducted from your annual non-wage income, and then the contribution rate is applied.

Calculating Health Insurance Contributions for Regional Subscribers

In the past, health insurance contributions for regional subscribers were calculated based on income, property, cars, and so on, but now the estimated-income contribution has been abolished and a property deduction system has been introduced.

As a result, regional subscribers are now subject to the same 6.99% contribution rate as employee subscribers, and pay contributions on their property after KRW 50,000,000 is deducted from the property tax base.

How National Pension Contributions Are Calculated

National Pension contributions are also divided between employees and regional subscribers, and 9% of your average monthly income is charged as the contribution.

For employee subscribers, the company and the individual each pay half of the contribution, while regional subscribers pay the full amount themselves.

If you previously worked at a company and are now doing side work after leaving, you fall under the National Pension's regional subscriber category, and you need to report your income and pay pension contributions.

How to Pay Less for the National Pension and Health Insurance

Is there a way to reduce your contributions after leaving your job?

If your contribution burden has grown after leaving your job, you can use the 'voluntary enrollment system'. With the voluntary enrollment system, for up to 3 years you only need to pay the share of contributions you paid yourself before leaving. However, you must have maintained employee subscriber status for at least 1 year, and you must apply within 2 months of going on leave. This voluntary enrollment system applies to both health insurance and the National Pension.

Meanwhile, if you are on leave or have no income, you can apply for a 'payment exemption'. A payment exemption is available when someone required to enroll in the National Pension loses their income due to business closure, unemployment, leave of absence, and so on, and it lets you temporarily stop paying contributions. Once you start earning income again, you can resume payments.

However, for health insurance this is handled as a payment deferral rather than a payment exemption, so you will need to pay those health insurance contributions later.

Wrapping Up

Health insurance and National Pension contributions that were automatically deducted while you were employed can become a burden after you leave your job. When that happens, try using the voluntary enrollment system and the payment exemption system to manage your contributions efficiently.

That wraps up the basics of health insurance and the National Pension, along with how to pay less in contributions. Thank you.