South Korea is planning to overhaul its national health insurance collection system, a move that could generate an estimated $1.1 billion in additional net revenue by requiring millions of households to pay premiums based on verified income. The reform highlights a broader challenge for health-care systems worldwide, including those monitored by U.S. insurers and investors: how to align contributions with actual earnings while maintaining funding for essential medical services.
The National Health Insurance Service outlined the proposal in a report submitted to the National Assembly’s Health and Welfare Committee on October 20. The plan would expand income-based premium adjustments to all eligible subscribers, replacing a system that largely relies on individuals to request recalculations with one in which authorities proactively verify income and settle accounts.
Under the current system, salaried employees initially pay health insurance premiums based on their previous year’s wages, with adjustments made each April after their actual income is confirmed. However, regional subscribers, including many self-employed people, and salaried workers earning income outside their regular paychecks generally do not undergo the same routine reconciliation process. This has created disparities, allowing premiums to remain unchanged even when income rises or falls.
Under the proposed system, authorities would obtain finalized income records from the National Tax Service and conduct mandatory annual reconciliations. About 9.08 million regional subscriber households and 1.1 million salaried employees with income beyond their regular wages would be subject to the adjustments.
An analysis of all 9.08 million regional subscriber households found that 3.94 million would owe additional premiums because their incomes had increased. Their combined additional payments are estimated at 3.29 trillion won, or approximately $2.3 billion.
Meanwhile, 2.32 million households would qualify for refunds because their incomes had declined, with total reimbursements estimated at 1.80 trillion won, or about $1.3 billion. The remaining 3.9 million households would see no change in their premiums.
The shift to automatic reconciliation could substantially expand access to refunds as well as increase collections. In 2025, only about 210,000 regional subscriber households received refunds after applying for adjustments themselves.
After accounting for the estimated refunds, the system would generate approximately 1.49 trillion won, or $1.1 billion, in additional net revenue.
South Korea’s experience with salaried workers illustrates the potential financial impact. During the April 2026 reconciliation, the system issued approximately 800 billion won in refunds while collecting an additional 4.5 trillion won in premiums, producing a net increase of about 3.7 trillion won in insurance revenue.
The health insurance authorities plan to use the additional funding generated by the expanded system to support regional and essential medical services and strengthen coverage for patients with rare and severe diseases.
The proposal would bring premium calculations more closely in line with subscribers’ actual financial circumstances, while giving the government a broader and more systematic way to collect contributions and return overpayments. Its implementation will determine how effectively South Korea can improve the fairness of its insurance system while securing additional resources for medical care.
