Recently, Guangdong and Shandong provinces have introduced new medical insurance payment term adjustments in the social security schemes. The new proposal requires employees to extend their minimum payment period from 25 years to 30 years for men and from 20 to 25 for women.

Under China’s social security system, employees and their employers must contribute a certain amount of their wages to ​​five mandatory insurance schemes, including endowment and medical insurance plans.

Employees’ contributions must meet a minimum term to be eligible for those benefits after their retirement. The usual minimum requirement is 25 years for men and 20 years for women, depending on local governments.

In June, Guangdong province proposed a regulation whereby the medical insurance payment term for employees in the province will be 30 years for male employees and 25 years for female employees.

Last year, Shandong province also issued a similar regulation for the minimum medical insurance payment term for employees in the province.

Commenting on the matter, Davy Jun Huang, an economist from the United States, said that in the past two or three years, inflation in China, the Covid epidemic, and pension problems have all been attributed to medical insurance fund shortage.

Professor Xie Tian of the Aiken School of Business at the University of South Carolina told the Epoch Times Chinese edition that the local government does not have enough money, and the insurance premiums received are insufficient to pay for medical insurance.

He said that medical insurance had misappropriation problems in the past. Therefore it cannot be ruled out that some officials have misappropriated some of the funds, causing the fund to run out of cash. 

To make up for the fund shortage, the proposal is to increase the premium insurance, extend the retirement age, or extend the term entitled to health insurance. 

Both Xie Tian and Davy Jun Huang believe that the initiatives from the two provinces are pilot programs. They said that authorities would promote this program in various places if there is no resistance.

Davy Jun Huang also raised concerns about rising medical insurance premiums in recent years. Huang cites an example of a farmer’s family where the farmer has to pay 20% of his income for premium medical insurance, twice what he used to. Huang concludes that this issue causes a burden for inter-provincial migrant workers and people with low income who often struggle with their lives. 

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