NHIS inflated personnel costs by $414 mil., shared surplus with employees: anti-corruption watchdog

The National Health Insurance Service (NHIS) overestimated personnel expenses by about 600 billion won ($414 million) over eight years and distributed the surplus among its employees, according to the Anti-Corruption and Civil Rights Commission (ACRC).

The ACRC announced on Thursday that from 2016 to 2023, the NHIS excessively allocated personnel expenses by about 600 billion won in violation of government guidelines and that the excess was shared among staff members.

As a quasi-governmental agency, the NHIS must allocate personnel expenses within limits set by the government under relevant regulations, including the Act on the Management of Public Institutions and the Budget Management Guidelines for Public Enterprises and Quasi-Governmental Organizations.

These regulations stipulate that when budgeting personnel expenses for team-level staff (Grades 4–6) at the NHIS, the salary of the appropriate rank must be applied—even if there are vacancies in higher grades—to prevent overcompensation for Grades 5 and 6 employees.

However, according to the ACRC, the NHIS violated these regulations by applying the remuneration of higher grades (Grades 4 and 5) to staff in Grades 5 and 6. This resulted in an over-allocation totaling 599.5 billion won from 2016 to 2023.

It was confirmed that the NHIS distributed this excess at the end of each year under the pretext of “regular employee wage increases,” dividing the funds by rank.

According to the commission’s investigation, the Public Agency Management Committee discovered the violation in 2024 and ordered a reduction of 144.3 billion won from future personnel expenses, addressing the excess for 2023. However, the anticorruption agency also found that personnel costs were overestimated by 455.2 billion won from 2016 to 2022, and these amounts were excluded from the current reduction measures.

Consequently, the commission determined that sanctions are necessary for the NHIS’s excessive personnel cost allocations over the eight years. It also called for verification of the NHIS’s compliance with personnel cost budgeting since 2024 and referred the case to the public agency supervisor.

“This case shows that a public institution operated with taxpayers’ money arbitrarily executed personnel expenses for years while ignoring laws, regulations, and government guidelines,” ACRC Chairperson Yoo Cheol-hwan said.

Yoo continued, “It is crucial for public institutions to earn and maintain public trust by implementing thorough preventive measures. The ACRC is committed to ensuring that public institutions supported by taxpayers operate transparently and with integrity. Upholding these standards is essential to restoring faith in our public systems and preventing future violations.”