The Self-Payment Limit System: A Safety Net with Loopholes?

South Korea’s health insurance system includes a “Self-Payment Limit” designed to alleviate the financial strain of significant medical expenses on households. This system refunds patients when their annual out-of-pocket medical costs exceed a predetermined threshold,which varies based on income. In 2024, this threshold ranged from ₩870,000 to ₩8,080,000.

Billions in Refunds Issued to Long-Term Delinquents

Despite the system’s intent,a comprehensive audit by the Ministry of Health and Welfare uncovered a troubling trend: considerable refunds being issued to long-term,high-amount premium delinquents. Between 2021 and 2024, over ₩3.9 billion was refunded to 4,089 such individuals, even though thay had outstanding debts to the health insurance system.

Last year alone, approximately ₩1.15 billion was refunded to 1,008 long-term, high-amount debtors.

Ethical concerns and Systemic Inequities

The Ministry of Health and Welfare has expressed concern that these overpayments, while affecting a small percentage (3.1%) of long-term debtors (32,439 individuals), undermine the basic principle of shared burden within the health insurance framework. The refunds are essentially being funded by premiums paid by compliant subscribers.

it is necessary to pay the health insurance premiums paid by other subscribers, so it is necessary to pay an institutional supplement because it is contrary to the purpose of the burden.

Ministry of Health and Welfare

Calls for Systemic Reform and Improved Oversight

The revelation of these overpayments has ignited public debate and calls for immediate systemic reform. Critics argue that the current system inadvertently rewards those who fail to meet their financial obligations, creating a moral hazard and perhaps incentivizing non-payment.

Experts suggest several potential solutions, including stricter eligibility criteria for refunds, enhanced debt collection mechanisms, and increased clarity in the refund allocation process. Some propose linking refund eligibility to payment history, ensuring that only those who consistently contribute to the health insurance pool benefit from the self-payment limit system.

Looking Ahead: Addressing the Imbalance

the Health Insurance Corporation faces mounting pressure to address this imbalance and restore public trust in the system. The upcoming months will be crucial as policymakers and stakeholders work to implement reforms that ensure fairness, accountability, and the long-term sustainability of South Korea’s national health insurance program. The focus must be on safeguarding the interests of the majority of subscribers who diligently contribute to the system, while also providing appropriate support for those genuinely in need.

the Challenge of Unpaid Health premiums

South Korea’s National Health Insurance system, while providing crucial healthcare access, faces a persistent challenge: unpaid premiums.This issue not only strains the financial stability of the system but also raises questions of fairness when refunds and benefits are distributed.

Legislative Efforts to Rectify the Imbalance

Recognizing this problem, lawmaker Choi Hye-young, along with the 21st National Assembly, introduced a bill proposing an amendment to the National Health Insurance Act. The core of the proposal centered on offsetting excess payments refunded to individuals against their outstanding health insurance premiums. The intention was to prevent those with significant arrears from receiving refunds before settling their debts.

Legal and Practical Obstacles

Despite the well-intentioned nature of the proposed amendment, it encountered significant legal hurdles. The National Health Insurance Corporation (NHIC) raised concerns about conflicts with existing legislation, specifically Article 59 of the National Health Insurance Act and Article 497 of the Civil Code. These articles protect the right to benefits from seizure or transfer, effectively preventing the NHIC from directly offsetting refunds against delinquent premiums.

Article 59 of the National Health Insurance Act states that the right to supply and benefits is impossible to seize or transfer.

Article 497 of the Civil Code also stipulates that the ban on seizure cannot be offset.

A Revised Approach: Prioritizing Premium Payments

In response to these legal constraints, a revised strategy is under consideration. This new approach focuses on amending the law to prioritize the payment of outstanding premiums before any refunds are issued. This would ensure that individuals with arrears settle their debts before receiving any excess payments.

The Ministry of Health and Welfare has highlighted the urgency of this reform, noting that more than 3,000 long-term and high-paying delinquents have received about 3 billion won in refunds despite their outstanding debts. This situation underscores the need for a more equitable system.

The “Copayment Refund” System and its Vulnerabilities

Similar issues have surfaced within the “copayment refund” system, which reimburses subscribers for medical expenses exceeding a certain threshold. While the system theoretically allows for offsetting delinquent premiums,loopholes have been exploited,leading to refunds being paid to individuals with substantial outstanding debts.

Data from 2021 to 2024 reveals that approximately 2,500 to 2,800 delinquents received as much as 30 million won annually in refunds, highlighting the scale of the problem. This situation demands immediate attention and systemic improvements.

Moving Forward: System Improvements and Legal Revisions

The NHIC has acknowledged these shortcomings and committed to improving the system in consultation with relevant departments. This includes pursuing legal revisions to address the loopholes and ensure that refunds are not disbursed to individuals with significant outstanding premiums. The goal is to create a more sustainable and equitable National Health Insurance system for all South Korean citizens.