3. National Health Insurance Act (NHIA)

National Health Insurance aims to improve public health and social security by providing insurance benefits for the prevention, diagnosis, treatment, and rehabilitation of injured and ill people, as well as assist with costs of childbirth and death, and promote health(Article 1 of the NHIA). National Health Insurance is a compulsory insurance that is divided into workplace and regional insurers. Currently, it covers about 97% of all citizens, with other medical services covered under the Medical Benefits Act, which is a form of public assistance for beneficiaries of the Basic Livelihood Subsidy. The self-employed who do not employ workers, daily workers employed for less than one month, and part-time workers who work less than 60 hours a month are not required to subscribe.
The insurance premiums for subscribing workers are an amount calculated by multiplying the standard monthly salary by the premium rate, with 50% of the premiums borne by workers and 50% by employers(Article 69). Therefore, the premiums are paid according to the individual’s standard monthly salary.

Long-term care insurance is a social insurance system separate from National Health Insurance. It was introduced in July 2008 due to aging of the population and the necessity to care for the elderly. It provides essential care services such as face washing, bathing, meals, assistance with using the toilet, and nursing care for elderly persons unable to move alone due to age-related diseases such as dementia and stroke. Long-term care insurance premiums are equivalent to 8.51% of National Health Insurance premiums.

(1) Application to foreign workers

All business and local subscribers covered by National Health Insurance are required to pay premiums. However, foreign workers(E-9) and visiting Korean workers(H-2) under the employment permit system in the Foreign Employment Act and in Article 7(4) of the Long-Term Care Insurance Act can be exempted through a separate application process through a nursing care insurance subscriber. All other foreign workers who do not have a basis for exemption are automatically subscribed to long-term care insurance and pay the premium along with the health insurance premium.

(2) Related issues

Foreigners and overseas Koreans are eligible for health insurance if their status of residence is recognized by relevant laws. Employers of native English instructors are required to subscribe for the 4 social insurances, but they often fail to do so for National Pension and National Health Insurance. This is because there is no real penalty for failing to subscribe to National Health Insurance. If non-Koreans are not workplace subscribers, they must be classified as local subscribers and join the compulsory system. However, if they sign contracts with new employers every year, they will not be protected as a local subscriber because their place of residence is unclear.

Article 109 of the NHIA, paragraph 4, states that foreign workers who are staying illegally are not covered by health insurance. Although Korea has about 366,500 illegal workers as of June 2019, this exclusion means they(and their families) find it difficult to receive adequate care for chronic conditions, childbirth and other health events due to the cost of medical care. Medical insurance should also cover illegal workers so as to guarantee the basic rights of human beings.

4. National Pension Act (NPA)

The National Pension Scheme is a system that pays old-age pensions to citizens who reach a certain age, or pays the pension to the citizen’s family if the pensioner is disabled or dies(Article 1 of the NPA). The National Pension Scheme was enacted on January 1, 1988, when the NPA came into effect. Initially, it applied only to workplaces hiring 10 or more workers, but then gradually expanded to every company.(Article 6). However, civil servants, soldiers, and private school workers subject to the Civil Service Pension Act, the Military Pension Act, and the Private School Pension Act, respectively, are excluded from membership. The National Pension Plan is divided into workplace subscribers and regional subscribers, and subscription is mandatory for workplaces that use one or more workers at all times. Excluded from workplace subscribers are the self-employed who do not employ workers, daily workers employed for less than one month, non-employed workers, or part-time workers who work less than 60 hours a month. Premiums are in proportion to income, with 50% borne by the worker and 50% by the employer. The types of benefits under the NPA include old-age pension, survivor’s pension, disability pension, and lump-sum refund.

(1) Application to foreign workers

Foreigners working in workplaces are subject to the National Pension Act(Article 126) and foreign nationals residing in Korea shall, of course, become business or regional subscribers. However, if the law equivalent to Korea’s NPA in the foreigner’s country of citizenship does not apply to Republic of Korea nationals living there, the principle of reciprocity applies. Those not covered by the National Pension Scheme are those here on temporary stay visas or without income.
National Pension applies to foreign nationals when they are employed at a workplace that must subscribe to it. To receive the pension benefit, the foreign national must have paid into the national pension for at least 10 years and reach the age of 60. This is not easy for most foreign workers to do. In this case, a lump-sum refund will be given, which will be handled in accordance with the social security agreement Korea has with that national’s country of citizenship. Lump-sum refunds are only given to those nationals from countries with such social security agreements with Korea(see Table next page).
However, since most of the sending countries in the employment permit system do not have social security agreements with Korea, most foreign workers are ineligible for the national pension, so they cannot receive a lump sum refund. In this regard, the failure to receive lump sum refunds despite the inability to receive old-age pension benefits raises the issue of a serious limitation on property rights. It also pays foreign workers in countries that do not. In addition, the National Pension Act was amended in January 2015 in accordance with the decision of the Constitutional Court in recognition of the property value of national pensions(Article 126 of the NPA).




(2) Related issues

It is difficult for foreign workers to receive the Korean old-age pension because they must contribute for a minimum ten years and then reach the age of 60(Article 77 of the NPA). Therefore, foreign workers who do not meet these requirements can receive the national pension benefit as a lump sum refund when they leave the country.
Non-professional foreigners stay for a short time and most return to their home countries within three to five years. In this case, the national pension paid in the meantime will be received as a lump-sum refund. The national pension premium is 9% of a worker’s total income, with workers and employers each paying 4.5%. Therefore, application of the National Pension on non-professional foreign workers who are unlikely to receive the benefits is an additional tax on the employer. The old-age pension for non-professional foreigners with short-term stays cannot help them as they are leaving Korea before their eligible date.

5. Evaluation

The four main insurances for foreign workers are granted natural benefits. With Industrial Accident Compensation Insurance, there is insufficient compensation to workers injured/ill from industrial accidents at workplaces hiring fewer than five workers in rural areas. If Employment Insurance is voluntary and foreign workers become unemployed or find another job, most will be excluded from maternity leave or parental leave. Illegal residents are excluded from National Health Insurance coverage. Paying into the National Pension Scheme is mandatory for non-professional foreign workers(E-9), even though it is impossible, under the short-term visa system, for them to stay long enough to be eligible for the benefits. which is another burden that the employer should pay as the employer’s burden in premiums. So, the National Pension should be excluded from the mandatory social insurances