SEOUL – The National Health Insurance Corporation (NHIC) in South Korea is facing scrutiny over billions of won in unclaimed refunds, raising concerns about the effectiveness of current reimbursement processes and the potential loss of these funds to the public. These refunds, which totaled ₩32.7 billion (approximately $24 million USD) as of September of last year, stem from overpayments, premium miscalculations, or other discrepancies.

The issue is not new, but the scale of the problem is escalating rapidly. Data reveals a stark increase in unclaimed refunds, jumping from ₩5.7 billion in 2022 to ₩12.4 billion in 2023. These funds,rightfully belonging to South Korean citizens,are at risk of being absorbed by the NHIC if not claimed within a three-year period.

“Health insurance refunds are the money that the Korea Health Insurance Corporation has no reason,such as a double payment of premiums,or the premium is incorrectly calculated due to the change in qualifications,” officials stated. “It is the ‘money of the people’ that must be returned to the people.”

The implications of this issue extend beyond mere financial inconvenience. For many U.S. families, unexpected refunds, even in smaller amounts, can make a significant difference, especially given current economic uncertainties. The Korean situation mirrors similar challenges in the U.S.,where unclaimed property,including insurance payouts and tax refunds,accumulates annually. States like California and New York have robust programs to reunite citizens with their unclaimed funds,highlighting the need for proactive measures.

In the U.S., the national association of Unclaimed Property Administrators (NAUPA) estimates that billions of dollars in unclaimed property are held by states. This includes forgotten bank accounts, uncashed checks, and insurance policy proceeds. NAUPA runs MissingMoney.com, a free online resource where individuals can search for unclaimed property held by state agencies.

The Three-year Deadline: A Race Against Time

Under current regulations in South Korea, unclaimed refunds revert to the NHIC’s financial revenue after three years. In 2020 and 2021 alone, ₩2.6 billion vanished each year due to the expiration of this deadline. Over the three-year span from 2019 to 2021,the total lost reached over ₩6.6 billion.

This “use-it-or-lose-it” policy raises concerns about fairness and accessibility, particularly for elderly or low-income citizens who may be less aware of these refunds or face barriers in claiming them. In the U.S., consumer advocacy groups often criticize similar policies, arguing they disproportionately affect vulnerable populations.

The NHIC has attempted to address this issue through initiatives such as “refund-intensive payment periods” and the introduction of a “Refund Account Submission System” for automatic deposits. They also utilize mobile electronic notices through the Naver app.

Despite these efforts,the results have been underwhelming. Approximately 40% (₩29.2 billion) of the refunds eligible for intensive payment over the past three years (2021-2023) remain unclaimed. Internal audits have revealed a passive approach in some branch offices, with limited follow-up beyond sending initial notices.

“About 40%(29.2 billion won) of the unpaid amount, which had been subject to intensive payment period in the last three years (2021-2023), was still not refunded,” the report stated.

Systemic issues and Proposed Solutions

Several factors contribute to the low refund rate. The pre-application rate for the refund account system remains low, with onyl 2.72% of local subscribers and 34.3% of workplace subscribers enrolled as of December of last year.Moreover, the mobile electronic notices have proven ineffective, with a reading rate of less than 10%.

These statistics point to systemic issues within the NHIC’s dialog and outreach strategies. Critics argue that a more proactive and personalized approach is needed to ensure that citizens are aware of their eligibility for refunds and have the means to claim them easily.

In response to these criticisms, the Korea Health Service has announced plans to improve the operation of intensive payment periods, strengthen follow-up management, and actively promote and expand the pre-application system and mobile guidance channels.

lessons for the U.S. Healthcare System

The situation in South Korea offers valuable lessons for the U.S. healthcare system, which also grapples with issues of unclaimed funds and administrative inefficiencies. While the specifics of healthcare financing differ, the underlying challenges of communication, accessibility, and proactive outreach are universal.

Here are some potential areas for improvement in the U.S., inspired by the Korean experience:

• Enhanced Communication: Implement multi-channel communication strategies, including mail, email, text messages, and partnerships with community organizations, to reach a wider audience.
• Simplified Enrollment: Streamline the enrollment process for direct deposit of refunds, making it easier for individuals to sign up.
• Proactive Outreach: Conduct targeted outreach campaigns to specific demographic groups, such as the elderly or low-income individuals, who may be less likely to claim refunds on their own.
• Data Analytics: Utilize data analytics to identify patterns and predict which individuals are most likely to have unclaimed funds, allowing for more targeted interventions.
• Transparency and Accountability: Increase transparency in the refund process and hold healthcare providers and insurers accountable for promptly issuing refunds.