From July 1, 2023, Vietnam's base salary will officially increase from 1.49 million VND/month to 1.8 million VND/month, corresponding to an increase of 20.8%. The base salary regime affects many industries and fields in Vietnam, including health insurance contributions for households.

Vietnam's base salary was increased with the approval of the Resolution on the state budget estimate for 2023 on 11/11/2022.

Base salary is the minimum salary indication used to calculate social insurance contributions and other payments in the salary and social insurance system in Vietnam.

According to Decision No. 595/QD-TTg of the Prime Minister of Vietnam issued on May 15, 2020, the base salary increased to VND 1,490,000/month from July 1, 2020.

According to Decision No. 1106/QD-TTg of the Prime Minister of Vietnam issued on July 15, 2021, the capital base salary will be increased to VND 1,800,000/month from July 1, 2021. However, as in 2021 and 2022, Vietnam was heavily affected by the pandemic, leading to the fact that making an increase in the base salary will be unreasonable at this time, seriously affecting the economy as well as unbalancing sources of expenditure needed to respond to the pandemic.

Instead, the increase in base salary is delayed. Vietnam will use that money to invest in stabilizing and supporting the lives of people affected by the Covid-19 pandemic. This delay is 2 years.

Increasing the cost of health insurance contributions in Vietnam

Health insurance contributions for households depend largely on the current base salary. Thereby, when the base salary increases from July 1, 2023, the cost of health insurance contributions of households will also increase accordingly.

According to Decree 146 of the Government, the health insurance contributions are calculated at 4.5% of the base salary or pension or unemployment benefit.

If payment is made according to the household, the first person pays 4.5% of the base salary. The second, third and fourth person with the same household shall pay 70%, 60% and 50% of the fee that the first person pays, respectively. The fifth person onwards pays 40% of the first person's rate.

With the current base salary of 1,490,000 VND, the monthly health insurance contribution per household is 67,050 VND for the first person. The second person pays 46,935 VND; the third person pays 40,230 VND; the fourth person pays 33,525 VND; the fifth person onward pays 26,820 VND.

From July 1 with a base salary of 1,800,000 VND, the rates paid by people per household will increase to 81,000 VND, 56,700 VND, 48,600 VND, 40,500 VND and 32,400 VND onwards with the fifth person.

Thus, when the base salary is increased, the health insurance contributions paid by household members will increase from 6,000 VND to 14,000 VND per month.

It should be noted that this change mostly only applies to people paying separate health insurance by household, i.e. not working at the enterprise and paying the rate as: 1.5% – 3% for employees and employers respectively, for a total of 4.5%.

If the employee works at region 1 on minimum wage in 2023 which is 4,680,000 VND, the amount of health insurance they have to pay each month is: 4,680,000 x 1.5% = 70,200 VND

The employer will have to pay double, equivalent to 3% of the employee's contributions salary of 140,400 VND.

This contribution will not be affected by the increase in base salary in July 2023. When working for enterprises, Vietnamese employees participating in compulsory social insurance at the minimum wage will pay less than the first person to pay according to the household.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.