[Exclusive] Emergency Disaster Relief Fund 'Cutoff' Property Value Likely Between 500 Million and 600 Million Won

Purpose to Avoid Controversy Over Supporting the Wealthy

Includes Both Real Estate and Financial Assets

Health Insurance Premium Payment Amount as the Basic Standard

Cutoff Criteria Raised at Least Twice Compared to Emergency Welfare Support Fund

On the 31st, a banner providing information about Seoul City's emergency disaster living expense support is hung on the outer wall of Seoul Library in Jung-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporters Joo Sang-don (Sejong) and Jang Se-hee] The government has confirmed that it is moving toward excluding wealthy individuals whose total assets exceed 500 million to 600 million KRW when selecting the 'bottom 70% income group' eligible for the emergency disaster relief fund. The bottom 70% income group will be selected based on health insurance premium payments, but to avoid controversy over 'supporting the wealthy,' a kind of 'cutoff (exclusion from eligibility)' will also be applied. The total assets used as the cutoff criteria include both real estate and financial assets.

On the 1st, a senior government official stated, "We plan to create an exception rule to cutoff those who own assets exceeding 500 million to 600 million KRW, such as real estate or financial assets, similar to the Emergency Welfare Support System," adding, "The basic standard will be based on health insurance premium payments."

This means that the disaster relief fund will only be available to those whose assets fall below a certain scale, similar to the Emergency Welfare Support System. However, since the Emergency Welfare Support System is intended for low-income groups, the criteria for the disaster relief fund are expected to be at least twice, and possibly three to four times, higher than those of the Emergency Welfare Support System. Also, the 500 million to 600 million KRW cutoff being discussed is based on individual standards, so the amount could increase when converted to household standards.

The selection criteria for the Emergency Welfare Support System are as follows: for assets, less than 188 million KRW in metropolitan areas, 118 million KRW in small and medium-sized cities, and 101 million KRW in rural areas; for financial assets, less than 5 million KRW. However, this standard was somewhat relaxed when preparing the additional budget for the novel coronavirus disease (COVID-19). A deduction of 69 million KRW from assets was decided to broaden the beneficiary pool. Accordingly, people living in metropolitan areas can receive support if they have assets below 257 million KRW. Financial assets, which are considered highly liquid, will also be deducted from 610,000 KRW for single-person households up to 2.58 million KRW for six-person households.

However, controversy over the cutoff criteria for the disaster relief fund is inevitable. According to KB Kookmin Bank's Live On Monthly Housing Price Trends, the median price of housing (including apartments, detached houses, and row houses) in Seoul in March was 702.12 million KRW. Criticism such as "Can a person owning one house be considered a high-net-worth individual?" is unavoidable.

The main standard for calculating the bottom 70% income group of the population is the health insurance premium. This is because the subscriber's asset situation is reflected when calculating the premium. For workplace subscribers, only income such as wages, business income, dividends, interest, and pensions is considered. In contrast, for regional subscribers, income as well as assets such as land, houses, buildings, ships, aircraft, jeonse (long-term lease), monthly rent, and the income conversion amount of passenger cars are also reflected. According to the National Health Insurance Statistical Yearbook, as of the end of 2018, there were 36.99 million workplace subscribers (17.479 million subscribers and 19.51 million dependents) and 14.082 million regional subscribers (8.053 million heads of households and 7.404 million household members).

Although the health insurance premium calculation standards differ between workplace and regional subscribers, the government plans to reflect this as is. Regarding this, a government official said, "It is more appropriate that workplace subscribers only consider income, while regional subscribers consider assets as well, which is why the standards differ when calculating health insurance premiums," adding, "We believe it is correct to follow this as is when calculating the bottom 70% income group."

There is also a practical reason due to time constraints. For workplace subscribers, the health insurance system does not have information on real estate and passenger cars other than income, making it difficult to add these. Conversely, for regional subscribers, it is possible to extract only income, but creating the related calculation formula and reviewing the results would take considerable time. Since President Moon Jae-in emphasized that "speedy payment is most important," it is difficult to unify the asset calculation standards for workplace and regional subscribers. Ultimately, the bottom 70% must be determined by listing income levels based on the existing health insurance system and applying a cutoff.

Meanwhile, the government plans to announce the selection criteria for disaster relief fund recipients by next week at the latest through a task force (TF) centered on the Ministry of the Interior and Safety and the Ministry of Health and Welfare.