how local health insurance premiums are calculated and what's wrong with them
each November, the premiums for community health plans are set for new enrollees. local health insurance premiums are calculated based on the previous year's income and assets as of June 1.
if you report your total income for the previous year in May, the KHIC receives the data in October and reflects it in November's premiums. In other words, you will pay premiums based on your 2023 income in October and 2024 income in November.
why the time difference matters
because of the way health insurance premiums are calculated, current income is not immediately reflected in premiums. for example, self-employed health insurance and freelance health insurance are very expensive because premiums are based on past high incomes, even if your income has plummeted.
what is the Health Insurance Premium Adjustment Request System?
the Health Insurance Premium Adjustment Request System is a system that temporarily lowers premiums when your income drops due to a business closure, leave of absence, or retirement. this system, which was created to address the problem of fluctuating health insurance premiums, has been significantly improved starting this year.
requirements for applying for an adjustment in 2025
interest, dividends, pensions, and other income are now eligible for adjustment
previously, only business income and reduced earned income were eligible for adjustment, but starting in January 2025, dividend income health insurance premiums, interest income health insurance premiums, and pension income health insurance premiums will be eligible for adjustment.
this means that even those who are facing a reduction in stock dividends or interest income after retirement can now apply for a reduction in their health insurance premiums.
you can apply for an adjustment even if your income increases
previously, you could only apply when your income decreased, but now you can apply for a premium adjustment when your income increases.
if your income has increased significantly, you can pay more up front so you don't have to pay a large amount later. this is especially useful for people with fluctuating incomes, such as freelancers, YouTubers, and retirees who rely heavily on dividends and interest, as a way to prepare for health insurance premium increases.
who can apply and when
you must apply for a health insurance rate adjustment yourself, as we cannot keep track of changes in your business performance or dividend or interest income in real time.
you can apply for an adjustment starting in June, and the timing depends on when you apply. if you apply in July, the adjustment will be retroactive to June's premium, and if you apply in August or later, the adjustment will be effective for the next month's premium. if your income has dropped due to a business closing or going out of business, you can also apply for a retroactive premium adjustment for premiums paid up to one year ago. cancellations can be made within 90 days of application.
frequently asked questions
Q1. Where can I apply for a health insurance premium adjustment?
you can apply in person at a KHIC branch, by calling the customer center, on the health insurance website, or through The Health Insurance App.
Q2. What happens if my income increases again after applying for an adjustment?
at year-end settlement, your premium will be recalculated against your actual income. if there is a shortfall, you will pay more.
Q3. Can I apply for the adjustment if I work?
this program is for local health insurance premiums only. If you work, you do not need to apply as your premium is automatically deducted from your paycheck each month.
Q4. Can I get an adjustment for reduced income if I have a lot of assets?
yes, you can get an adjustment for reduced income. however, the wealth portion is calculated separately, so your overall premium may not decrease significantly.
Q5. How long does it take to be approved after I apply?
generally, you will receive a decision within two weeks to a month after applying.
wrapping up
starting in 2025, the eligibility for health insurance premium adjustment has been expanded and the requirements have been relaxed. those with large income fluctuations should definitely consider applying for an adjustment after June.
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