Incheon recovers W3.68b from 'ghost employees' dodging health insurance

A total of 423 people in Incheon were caught over the past three years falsely registering as employees at businesses run by family members or acquaintances — without actually working there — to lower their national health insurance premiums, according to data released Wednesday.

The retroactive premiums levied on these so-called ghost employees totaled 3.68 billion won ($2.75 million). The average amount recovered per person was about 20 percent higher than the national average.

Notably, while the number of people caught has declined, the total amount recovered has risen — a sign that premium evasion through fraudulent workplace enrollment is growing in scale per case.

Sham employment at family-run businesses accounted for 44 percent of all recovered premiums, and sharp increases in certain districts have prompted calls for tighter oversight to prevent fiscal leakage from the national health insurance system.

Democratic Party of Korea lawmaker Heo Jong-sik, a member of the National Assembly's Health and Welfare Committee representing Incheon's Dong-gu and Michuhol-gu A district, released the data obtained from the National Health Insurance Service. It showed that 423 people in Incheon were caught fraudulently obtaining workplace enrollee status between 2023 and 2025, with retroactive premiums totaling 3.68 billion won — an average of 8.71 million won per person.

Nationwide over the same period, 9,202 fraudulent workplace enrollees were detected and assessed approximately 66.6 billion won in premiums. The national per-person average was about 7.24 million won, meaning Incheon's average was roughly 20 percent higher.

The scheme persists largely because of the difference in how premiums are calculated for workplace enrollees versus locally enrolled subscribers.

Workplace enrollees pay premiums based primarily on their wages, with the cost split between employer and employee. Locally enrolled subscribers, by contrast, have their premiums calculated on both income and assets such as housing and land.

This gap leads some subscribers facing heavier premium burdens to list themselves as employees at a family member's or acquaintance's business — without actually working there — to qualify for the lower workplace rate.

Obtaining workplace enrollee status purely on paper, without any actual employment, undermines the fairness of the national health insurance system and shifts the burden onto those who pay their premiums honestly.

Sham employment at family businesses drew the most scrutiny. Over the three years, 136 people were caught in this category, with recovered premiums of 1.62 billion won — 44 percent of the total. A catch-all "other" category accounted for 218 people and 1.53 billion won, or 40.8 percent of the total.

Nineteen people were caught during checks of those subject to the out-of-pocket ceiling system, resulting in 338.53 million won in assessed premiums.

Twenty-seven people were caught obtaining workplace enrollee status by registering as care workers for family members, with 60.33 million won recovered. Eleven high-income retirees and 12 people who failed to report earned income were also caught in related categories.

Annual figures show a divergence between detection numbers and recovered amounts. The number of people caught rose from 110 in 2023 to 171 in 2024, then fell to 142 last year.

Recovered premiums, however, climbed from 1.16 billion won in 2023 to 1.16 billion won in 2024 and then to 1.37 billion won last year — an increase of about 18 percent from the previous year.

The per-person average recovered also rose from 6.77 million won in 2024 to 9.65 million won last year, a gain of about 42 percent.

The decline in detections alone does not mean the problem is easing. As the scale of individual cases grows, there are calls to improve the effectiveness of investigations and post-assessment collection.

By district, Bupyeong-gu recorded the most detections in Incheon over the three years, with 95 people caught and 825.49 million won recovered.

Namdong-gu saw 83 people caught and 743.42 million won assessed. Last year alone, Namdong-gu accounted for 430.01 million won — 31.4 percent of Incheon's total for the year.

Gyeyang-gu also stood out, with recovered premiums surging more than sevenfold in two years, from 23.01 million won in 2023 to 164.04 million won last year. District-level figures are tabulated by the location of the registered business, however, and may not reflect where the enrollees actually live.

Some of the assessed premiums remain uncollected. As of Oct. 1, outstanding arrears stood at approximately 72 million won. The challenge, officials say, is not only detecting fraudulent enrollment but also ensuring that assessed premiums are actually collected.

Regulatory penalties are also being strengthened. An amended National Health Insurance Act passed the National Assembly in April and is set to take effect in November.

The surcharge imposed on employers who falsely report workplace enrollees will rise from 10 percent to 40 percent.

A whistleblower reward program will be introduced for reporting employers who file false enrollment declarations, and the statute of limitations for assessing premiums in cases of fraudulent evasion will be extended from the standard three years to a maximum of six years.

Heo criticized premium evasion through sham employment as an act that shifts the burden onto honest payers and undermines the fiscal health of the national health insurance system.

"Incheon's per-person recovery amount is higher than the national average, and assessed premiums are rising sharply in specific areas such as Namdong-gu and Gyeyang-gu and at family-run businesses," Heo said. "The National Health Insurance Service must step up targeted inspections of high-asset individuals, single-person corporations and family businesses, and must also make legal sanctions against employers who abet or collude in fraudulent enrollment genuinely effective."