As more than 2.26 million people received refunds last year for excess medical costs through the out-of-pocket maximum refund program, critics said the system should be improved because refunds can take up to 20 months. Because many eligible recipients are low-income and older adults, the annual settlement cycle should be shortened to quarterly or semiannual.
According to the Ministry of Health and Welfare and the National Health Insurance Service on the 5th, with the per-person out-of-pocket maximum amounts for 2025 services finalized, the refund process for excess amounts began on the 31st of last month. This year's number of recipients is 2,262,605, up 5.9% from a year earlier. Total payments rose 10.2% to 3.076 trillion won. The average refund per person is about 1.36 million won.
Under the out-of-pocket maximum program, if the amount a patient pays out-of-pocket for health insurance-covered services over a year exceeds an income-tiered cap, the National Health Insurance Service refunds the excess. Non-covered items are excluded. For 2025, the per-person cap ranges from 890,000 won to 10.74 million won.
Refunds are concentrated among vulnerable groups with relatively high medical cost burdens. Of all recipients, 2,016,503 people, or 89.1%, are in the bottom 50% income bracket, and they receive 2.3556 trillion won, or 76.6% of the total.
The share of older adults is also high. Patients 65 and older number 1,310,761, or 57.9% of all recipients, and account for 2.0596 trillion won, or 67.0%, by payment amount.
The problem is that refunds of out-of-pocket payments come far too late. Currently, medical bills incurred from Jan. 1 to Dec. 31 are totaled on a yearly basis, then individual caps are set at the end of Aug. the following year and the excess is paid.
For example, even if a patient who paid several million won in hospital bills in January due to a serious illness or accident has already exceeded the annual cap, the actual refund may not occur until after Aug. of the following year. From the time of medical expenditure, patients may have to front the money for up to 20 months.
There is a prepayment benefit system, but its scope is limited. Only when a patient's annual out-of-pocket amount at the same medical institution exceeds 8.26 million won, the highest cap for 2025, can the hospital bill the National Health Insurance Service directly without collecting the excess from the patient.
If a patient receives treatment at multiple medical institutions, applying prepayment benefits can be difficult. Even if a patient's individual cap is set at 890,000 won based on income, the patient is not eligible for prepayment benefits if the out-of-pocket amount at any single institution does not exceed 8.26 million won because care was split among several hospitals.
The National Assembly Research Service proposed shortening the refund cycle to quarterly or semiannual to reduce this lag.
The approach would use accumulated claims data in the health insurance IT system to provisionally calculate and pay excess amounts at set intervals, then, once final income deciles are confirmed the following year, conduct an additional settlement to reconcile any difference with the actual cap.
It also cited as grounds that quarterly or semiannual settlement methods are used in other public welfare areas, such as the National Tax Service's earned income tax credit.
The research service noted that, given the main beneficiaries of the out-of-pocket maximum program are low-income and older adults, it is necessary to consider shortening the refund cycle to meaningfully reduce medical cost burdens.