Legal Basis: Decision of the State Council on the Establishment of a Basic Medical Insurance System for Urban Workers Article 2 All employers in towns and cities, including enterprises (state-owned, collective, foreign-invested, and private enterprises, etc.), organs, institutions, social organizations, and privately-run non-enterprises and their employees, are required to participate in basic medical insurance. Whether or not township and village enterprises and their employees, and owners of urban individual economic organizations and their employees participate in basic medical insurance shall be decided by the people's governments of the provinces, autonomous regions and municipalities directly under the central government.
Basic medical insurance is, in principle, co-ordinated in administrative regions above the prefecture level (including prefectures, cities, prefectures and unions), or in counties (cities), with the three municipalities directly under the central government of Beijing, Tianjin and Shanghai co-ordinating the insurance on a city-wide basis (hereinafter referred to as co-ordinated regions). All employers and their employees are required to participate in the basic medical insurance of their co-ordinated areas in accordance with the principle of territorial management, and to implement uniform policies and the unified collection, use and management of the basic medical insurance fund. Enterprises and their employees in railroads, electric power, ocean shipping and other cross-region enterprises with high mobility of production may participate in the basic medical insurance of the co-ordination area in a relatively centralized manner.
Basic medical insurance premiums are paid by both employers and employees***. Employer contribution rate should be controlled at about 6% of the employee's gross salary, the employee contribution rate is generally 2% of their salary income. With economic development, the employer and employee contribution rate can be adjusted accordingly.