An office worker surnamed A recently had a baffling experience at an orthopedic clinic near the office. A had gone in because a jolt of pain shot through the elbow whenever it touched anything, but the first question from the staffer at the front desk was whether A had indemnity health insurance. After answering yes, A waited about 10 minutes before entering the examination room.
When A described the symptoms, the doctor abruptly moved to administer an injection. Asked what it was, the doctor said it was a shot to relieve pain and that A should go elsewhere if unwilling to take it. Offended, A declined treatment. On the way out of the examination room, another staffer pointed to a mat-covered bed and suggested A lie down for treatment and rest a while.
Non-covered medical bills are snowballing as clinics increasingly abuse indemnity health insurance or run "payback" schemes in which they return part of the treatment cost to patients in cash. The government has introduced a "managed benefit" system that sets price ceilings to curb excessive treatment, but lawmakers have pointed to structural limits in oversight and enforcement.
Non-Covered Spending Drains Health Insurance Finances
Non-covered medical bills totaled 21.8 trillion won ($15.6 billion) in 2024, up about 39.7% from 15.6 trillion won in 2020, according to an analysis released by the National Assembly Research Service on the 21st. Non-covered out-of-pocket payments accounted for 15.8% of total patient treatment costs, extending an upward trend of the past three years.
Total treatment costs paid by the National Health Insurance Service also more than doubled over a decade, rising to 90 trillion won in 2024 from 41 trillion won in 2014.
The Ministry of Health and Welfare said non-covered and covered spending rose together as the spread of indemnity insurance combined with medical institutions' drive to shore up revenue, fueling "mixed treatment" in which non-covered procedures are provided alongside items covered by national health insurance.
In February 2026, the government introduced the managed benefit system to rein in excessive non-covered care. Three of the largest non-covered spending items — manual therapy, percutaneous epidural neuroplasty and radiation hyperthermia — were shifted into a benefit structure under which patients pay 95% of the cost and the insurance service pays 5%. The aim was to cap prices and improve transparency in how the services are used.
As a result, a single session of manual therapy, which had cost an average of 110,000 won and as much as 600,000 won, was standardized at 43,850 won for the patient, capped at twice a week and 15 sessions a year.
Paybacks Cannot Be Left Alone, Enforcement Must Be Tightened
The research service concluded, however, that expanding the list of managed benefit items alone will not stamp out irregular and illegal practices such as paybacks.
Under the current medical law, non-covered reporting requirements apply only once a year for clinics, covering March treatment, and twice a year for hospitals, covering March and September treatment, leaving limited room to detect warning signs, the service said.
At some long-term care hospitals and oriental medicine hospitals promoting cancer treatment and other services, investigators have found numerous cases of unnecessary non-covered procedures being bundled in to match indemnity insurance payout limits, or false receipts being issued to inflate bills before 20% to 40% of the payment was returned in cash.
The service stressed that such practices amount to waiving patient co-payments and soliciting or brokering patients, both banned under the medical law, as well as insurance fraud. Yet from January 2015 to March 2026, there was not a single case in which a treatment-cost payback was penalized as a violation of the medical law, it noted. Despite legal grounds for on-site inspections, enforcement by the central and local governments has been inadequate, the service said.
Beyond widening the scope of managed benefits, the service said the government should review whether other measures discussed earlier — including restrictions on mixing covered and non-covered treatment and the removal of items from the non-covered list — have been carried out. It also recommended a thorough crackdown on illegal paybacks and, in consultation with financial regulators, an overhaul of the structure of indemnity insurance products.
