Origins: who built it and why
Korea's National Health Insurance began in 1977 with large firms and covered everyone by 1989, but it kept premiums low by leaving patients a large share of costs (Kwon, 2009). Families facing cancer or rare diseases could be ruined despite being insured. In July 2004 the health ministry and the National Health Insurance Service capped co-pays at 3 million won per six months. In 2009 the cap became annual and income-linked in three bands, and in 2014 it was split into seven bands, with lower caps for lower incomes.
The 2025 caps
Caps follow income bands based on health-insurance premiums and are adjusted for inflation each year. Long stays of over 120 days in long-term care hospitals carry higher caps (Ministry of Health and Welfare, 2025).
| Income band | 2025 cap | Care-hospital stay >120 days |
|---|---|---|
| 1st (lowest) | KRW 890,000 | 1.41 million |
| 2nd–3rd | 1.10 million | 1.78 million |
| 4th–5th | 1.70 million | 2.40 million |
| 6th–7th | 3.20 million | 3.96 million |
| 8th | 4.37 million | 5.69 million |
| 9th | 5.25 million | 6.84 million |
| 10th (highest) | 8.26 million | 10.74 million |
If someone in the 2nd–3rd band paid 3 million won in covered co-pays, the 1.9 million won above the cap comes back.
How refunds work
- Advance: if co-pays at one hospital exceed the top cap (8.26 million won in 2025), the hospital bills NHIS for the rest. Long-term care hospitals are excluded.
- After the fact: when several providers add up past your cap, NHIS sends a notice the following year once your income band is settled; apply online or in the NHIS app.
- Excluded: non-covered care, selective coverage and private-room surcharges. For those, people buy private indemnity insurance.
The economics
Arrow (1963) explained why uncertain medical risk should be pooled, while the RAND experiment paired co-pays with annual caps and showed cost sharing lowers use while caps protect the seriously ill (Manning et al., 1987). Xu et al. (2003) defined catastrophic spending as health costs above 40% of a household's capacity to pay, and Wagstaff and van Doorslaer (2003) measured how bills push families into poverty. Low caps for low-income bands target exactly that risk, mixing pooling and redistribution as described in the principles of social insurance.
Checklist for residents
- Watch for the NHIS notice around late summer if anyone in your family had large bills.
- Check unclaimed refunds in the NHIS app, especially after moving.
- Refund claims expire after three years.
- Foreign residents enrolled in National Health Insurance receive the same caps. See Korea's four social insurances for the wider system.
FAQ
- Are non-covered treatments included?
- No. Only co-pays for covered care count toward the cap.
- When will I get the refund?
- Multi-provider refunds are notified the following year after your income band is finalized; you can check and apply in the NHIS app.
Sources reviewed: 2026-11-02
References
- Arrow, K. J. (1963). Uncertainty and the welfare economics of medical care. The American Economic Review, 53(5), 941–973. Classic case for pooling the risk of unpredictable medical bills.
- Manning, W. G., Newhouse, J. P., Duan, N., Keeler, E. B., Leibowitz, A., & Marquis, M. S. (1987). Health insurance and the demand for medical care: Evidence from a randomized experiment. The American Economic Review, 77(3), 251–277. RAND experiment combining co-pays with an annual out-of-pocket cap.
- Kwon, S. (2009). Thirty years of national health insurance in South Korea: Lessons for achieving universal health care coverage. Health Policy and Planning, 24(1), 63–71. Thirty years of Korean national health insurance and its high out-of-pocket share.
- Xu, K., Evans, D. B., Kawabata, K., Zeramdini, R., Klavus, J., & Murray, C. J. L. (2003). Household catastrophic health expenditure: A multicountry analysis. The Lancet, 362(9378), 111–117. Defines and measures catastrophic health spending across 59 countries.
- Wagstaff, A., & van Doorslaer, E. (2003). Catastrophe and impoverishment in paying for health care: With applications to Vietnam 1993–1998. Health Economics, 12(11), 921–933. How medical bills push households into poverty, and how to measure it.
- 보건복지부. (2025). 2025년 건강보험 본인부담상한제 소득구간별 상한액. Ministry of Health table of 2025 caps by income band.
- 국민건강보험공단. (2026). 상한제 본인부담상한액 [공공데이터]. NHIS open data on yearly caps and refund recipients.