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| Rising health insurance costs after retirement

While working, many people rarely think about health insurance contributions. However, once retirement approaches, one question comes up frequently: "Will my health insurance premiums increase after retirement?"

In reality, one of the biggest financial shocks after retirement is the change in health insurance premiums.

When employed, your company pays about half of the insurance contribution. But once you retire, most people are switched to the regional insurance system.

Under this system, contributions are calculated not only from income but also from assets such as housing, vehicles, and financial holdings.

Because of this, many retirees call health insurance contributions “the second tax after retirement.”

Another important factor that many people overlook is how retirement benefits are received.

Choosing between a lump-sum payout or a pension-style payout may affect both taxation and potential health insurance contributions in the future.

In this article, based on insights from pension expert Young-Joo Lee, featured on the YouTube channel “Toad Tax Accountant”, we will explain the hidden structure of retirement health insurance costs and practical strategies to reduce them.

| Why health insurance premiums rise after retirement

While employed, health insurance contributions are shared between the employee and the employer under the employee insurance system.

However, after retirement, most people are automatically transferred to the regional insurance system.

Under this system, insurance premiums are calculated not only based on income but also on assets such as housing and vehicles.

| Voluntary continuation insurance

Fortunately, there is a system called voluntary continuation insurance.

This allows retirees to continue paying health insurance contributions similar to their previous employee rate for up to three years.

However, the key point is that the application must be submitted within two months after retirement.

| Lump sum vs pension payout

Retirement benefits can generally be received in two ways: a lump-sum payment or a pension-style payout.

While pension payments provide stable income for retirement, they may be treated as pension income in the tax system.

Currently, pension income from retirement plans is generally exempt from additional health insurance contributions, but the structure of the law allows policy changes in the future.

| Tax-free annuity insurance

Tax-free annuity insurance is often mentioned as a strategy to reduce both taxation and potential health insurance burdens in retirement planning.

When certain conditions are met, the interest income generated from the policy may be exempt from the typical 15.4% financial income tax.

Because the payout is structured differently from ordinary financial income, it may also have limited impact on health insurance contribution calculations.

| Guaranteed annuity strategies

Some annuity products offer guaranteed return structures and lifetime pension payments.

However, these products are generally designed for long-term retirement income rather than short-term investment.

| Key retirement strategies

Many people focus only on investment returns when preparing for retirement. However, one of the biggest financial burdens after retirement is health insurance contributions.

After leaving employment, most people become regional health insurance subscribers, which means their insurance premiums are calculated based on both income and assets.

Planning retirement therefore requires not only saving money, but also understanding the structure of taxes and health insurance contributions.