Welfare Ministry proposes expansion in social security program coverage

(Yonhap)

South Korea’s Ministry of Health and Welfare is pushing to expand the coverage of key social security programs in line with the new administration’s welfare expansion policy.

According to sources from the State Affairs Planning Advisory Committee and relevant ministries on Wednesday, the welfare ministry submitted a so-called “campaign pledge implementation plan” to the committee, proposing major expansions to key social security policies such as child allowances, basic living support, medical benefits, and sickness allowances.

The government currently provides 100,000 won ($73.57) per month to children under the age of eight, but the ministry plans to gradually expand the benefit to children under the age of 18 in line with the president’s campaign pledge.

If the age limit is expanded by two years annually, it is estimated that an additional 8 trillion won will be needed over the next five years.

The ministry also reportedly proposed narrowing the eligibility for the Our Children’s Self-Reliance Fund to children aged 8 to 17 and reducing the government’s monthly contribution from 100,000 won to 25,000 won.

In June 2024, the Democratic Party of Korea had proposed a bill to establish a self-reliance fund where the government would provide 100,000 won per month for children under the age of 18, with parents contributing the same amount.

The ministry’s proposal significantly reduces the support amount and the number of eligible recipients, but it is still expected to require an additional 4 trillion won over five years. The required budget could increase during deliberations.

The welfare ministry also plans to expand eligibility for the Basic Livelihood Security Program, including basic living and medical benefits.

Basic living support provides necessities for daily life such as clothing, food, and fuel to low-income households.

It is currently available to households earning below 32 percent of the median income, and the ministry plans to gradually raise this threshold to 35 percent.

Medical benefits help low-income individuals with healthcare expenses and have a more lenient income threshold - below 40 percent of the median income - but still retain the dependent support obligation rule.

The ministry is considering effectively abolishing this requirement by 2027.

These reforms to the two programs are projected to require an additional 6.6 trillion won in funding.

Sickness benefits provide income support to workers who are unable to work due to illness or injury unrelated to their jobs, allowing them to focus on recovery.

If the current pilot programs in 14 local governments are expanded nationwide and extended to individuals earning up to 120 percent of the median income, approximately 90 billion won per year would be needed.

The issue is funding.

According to the Ministry of Economy and Finance, the managed fiscal balance as of the end of April showed a deficit of 46.1 trillion won, the third-largest shortfall on record.