Social Insurance System in Japan

What are Social Insurance Schemes?

In Japan, companies are required to follow the social norm of universal healthcare coverage. The system is essential for the employees to work healthfully and contribute to the companies to which they belong. In Japan, corporate social insurance system includes all of the following 4 insurance types.

  1. Kenko Hoken (Health Insurance)
  2. Kosei Nenkin Hoken (Employees Pension Insurance)
  3. Rosai Hoken (Industrial Injury Insurance)
  4. Koyo Hoken (Employment Insurance) 

Here below are the details of the 4 schemes to help you understand how you prepare for the system concerning your own companies and employees. Plus, it can help you openly claim the status of “social insurance benefits included” when posting the job ads and making an appeal to candidates.

Does my company have to comply with the schemes?

For employers, except for a self-employed employee or a sole proprietor employing 4 or fewer employees, who are not registered as corporate companies. In Japan, all the companies must comply with Social Insurance Schemes and cover their employees regardless of the size and types of companies such as company limited (Kabushiki gaisha), limited liability company (Godo gaisha), general partnership company (Gomei gaisha), and limited partnership company (Goshi gaisha).

The schemes applies to all organization types such as incorporated association (Shadan hojin), incorporated foundation (Zaidan hojin), or incorporated administrative agency (Dokuritsu gyosei hojin).

Cost for Social insurance Scheme

To comply with the Social Insurance Scheme in Japan, employers have to calculate and arrange payments based on each employee’s salary. There are 2 types of contribution (employer’s contribution and employee’s contribution), and the ratio of each contribution differs depending on a type of insurances.

Employer’s contribution is topped up and the employee’s contribution is deducted from their monthly salary, and usually the employer’s total contribution for social insurance is approx. 15% of the staff’s monthly salary.

Types of social insurance in Japan

Kenko Hoken (Health Insurance)

<Who are eligible for Kenko Hoken (Health Insurance)?>  

The employees who are working full-time or employees whose monthly working hours are ¾ more of those of the full-time regular employees are covered by the schemes. Even if this condition is not met, the employees are eligible for the schemes provided all the 5 conditions as follows are met;  

  • Weekly working hours are 20 hours or more.
  • The monthly fixed salary is 88,000 JPY or more.
  • The estimated employment term is one year or more.
  • Not being a student.
  • Working for the company whose employees are 501 or more without condition, or the company employees are 500 or less and with the agreement on the social insurance coverage between labour and management.

<Benefits of Kenko Hoken> 

This insurance is to provide medical care benefits for the employees or their family members when they feel unwell or suffer injuries in which these bills are claimable.

If they pay the bill to see a doctor, the co-payment of the employees is 30% while the rest of the 70% is defrayed by the insurers such as Japan Health Insurance Association through Social Insurance Medical Fee Payment Fund when it is billed by hospitals or pharmacies.  There is another scheme called Kaigo Hoken ( Nursing-care Insurance) under Kenko Hoken, which is a benefit scheme for the employees with the age of 65 or above when they need caring support. This scheme also applies to the employees with the age between 40 and 64 when they need caring support due to the specified disease such as terminal cancer or rheumatoid arthritis.

Kosei Nenkin Hoken (Employees Pension Insurance)

<Who are eligible for Kosei Nenkin Hoken (Employees Pension Insurance)?>

The employees who are working full-time regardless of employment type or the workers whose monthly working hours are ¾ or more of those of the full-time regular employees are covered by the schemes. Even if this condition is not met, the employees are eligible for the schemes provided all the 5 conditions as follows are met; 

  • Weekly working hours are 20 hours or more.
  • The monthly fixed salary is 88,000 JPY or more.
  • The estimated employment term is one year or more.
  • Not being student.
  • Working for the company whose employees are 501 or more without condition, or the company whose employees are 500 or less and with the agreement on the social insurance coverage between labor and management.

<Benefits of Kosei Nenkin Hoken> There are two specific schemes, Shogai Nenkin and Izoku Nenkin under Kosei Nenkin Hoken. Under each scheme, the employees can receive the pension provided by the Japan Pension Service, which is commissioned by the government.

  1. The people above the age of 65. (Kosei Nenkin Hoken)
  2. The people who have become severely disabled during the enrollment period. (Shogai Nenkin)
  3. The people whose insured spouses have passed away. (Izoku Nenkin)

Rosai Hoken (Industrial Injury Insurance)

<Who are eligible for Rosai Hoken (Industrial Injury Insurance)?>

Rosai Hoken (Industrial Injury Insurance) covers all the employees including how long they have been working in the industry, how much they earn, where they work, or what position they work under. Simply, as long as someone is employed for work, he or she is covered by this scheme.

<Benefits of Rosai Hoken>

The employees receive this benefit when they suffer injuries or fall sick during their work or commuting, which leads to disability or death. (the employees or their family members receive the benefit of this insurance.)

Koyo Hoken (Employment Insurance)

<Who are eligible for Koyo Hoken (Employment Insurance)?>

All the employees with the following conditions are covered by the scheme.

  • Regular working hours per week are 20 hours or more.
  • Expected to be working for 31 days or more after the commencement of work.
  • Not a student.

<Benefits of Koyo Hoken>

This is unemployment insurance. If the company employs a new employee, it must notify the public job placement office (Hellowork) in the region for this. With this scheme, the employees can receive the benefit 7 days after the job loss (voluntary termination or disciplinary dismissal requires 3 more months). The daily amount provided is 50% to 80% of the daily salary of the previous job (45% to 80% for the people of the age between 60 to 64), where the rate is higher for a lower amount of salary. Duration of the benefit varies depending on how long the employees had been covered by the scheme and how old they are at the time of the job loss as shown below.


Coverage year/AgeBelow 1 year1 year to below 5 years5 years to below  10 years10 years to below 20 years20 years or more
Below 30-year-old90 days90 days120 days180 days-
30- to 34-year-old120 days180 days210 days240 days
35- to 44-year-old150 days240 days270 days
45- to 59-year-old180 days240 days270 days330 days
60- to 64-year-old150 days180 days210 days240 days

Summary

To sum up, as mentioned above all the Japanese public insurance scheme is based on the social norm of universal healthcare coverage. However, in reality, many employees who are covered by the schemes also contract with private life insurance companies by their own simply because the provided public insurance benefits are not enough for them (same goes for car insurance). Additionally, nowadays, Kosei Nenkin Hoken has sometimes been criticized because the system might collapse if the government fails to keep the ageing society with fewer children in check.  This is due to the Assessment System, where the generations are still working and paying for the cost of the benefits for the generations above the age of 65 instead of themselves. It is estimated that in 2025, 1.8 people will be supporting 1 people of age 65 and above. To make Japanese society more sustainable in the future, some employees insist that there is no choice but to accept more immigrants. Hence, the Universal Healthcare Coverage in Japan is an essential system that protects the employees.

Sources

  • https://hrnote.jp/contents/a-contents-2944/
  • https://www.mhlw.go.jp/content/12400000/000377686.pdf
  • https://www.mhlw.go.jp/file/06-Seisakujouhou-12300000-Roukenkyoku/2gou_leaflet.pdf
  • https://www.jetro.go.jp/invest/setting_up/section4/page9.html
  • https://www.chicago.us.emb-japan.go.jp/nihonnosyakaihosyouseido.pdf
  • https://www.med.or.jp/people/info/kaifo/history/
  • https://townwork.net/magazine/knowhow/sinsurance/42850/
  • https://diamond.jp/articles/-/182711?page=2
  • https://doda.jp/guide/money/008.html
  • https://keisan.casio.jp/exec/system/1426729546

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