Local Subscribers Face Rising Health Insurance Premiums After Retirement

When individuals lose their workplace health insurance eligibility after retirement and switch to local subscriber status, they face a problem of significantly increased premiums based on their home ownership or financial assets. This is because they must now pay the entire premium themselves, which was previously split with their employer. Furthermore, not only income but also assets such as real estate and financial income are included in the premium calculation. Local subscriber health insurance premiums are calculated by summing the income-based premium, which is the monthly income multiplied by the premium rate, and the asset-based premium, which applies grade-based points after deductions from the taxable value of real estate. With the substantial reflection of owned real estate in premium calculations after retirement, which was not keenly felt as an employee, the burden particularly increases for retirees and those receiving rental income.

One way to reduce health insurance premium burden is to maintain employer-sponsored subscriber status. By re-employment or operating a business that meets certain criteria, one can maintain this status, which is advantageous as assets are not included in the premium calculation unlike for local subscribers. If income and asset criteria are met, dependents such as spouses or children can be registered, potentially exempting them from premiums.

Utilizing the voluntary continuation program allows individuals to maintain their pre-retirement employer-sponsored premium levels for up to three years. Applying for premium adjustments by proving a decrease in income or the disposal of real estate is also an option. Private pension income, such as from Individual Retirement Pensions (IRP) or pension savings accounts, is excluded from the premium calculation.

Health insurance premiums are increasingly becoming a fixed cost that influences retirement cash flow, going beyond a simple medical expense concept. Therefore, when planning for retirement, individuals must consider not only pension plans but also the structure of health insurance premiums. Comprehensive planning before retirement, encompassing financial income strategies, real estate holding strategies, and pension withdrawal structures, is necessary to reduce the difference in actual take-home living expenses.