Japanese Social Insurance System

Overview of the Social Insurance Systems

In the aim of supporting you to have a secured and stable livelihood, the social insurance systems have been established to provide you with the medical care benefits and pensions in the event of sickness, injury, childbirth, death, old age and disability. Under the principle of universal coverage, all registered residents of Japan must enroll in one of the appropriate social health care and pension insurance systems.

The main social insurance systems for salaried workers in companies and factories in Japan are the Employees’ Health Insurance (健康保険、KENKO HOKEN in Japanese) system (one type managed by the Japan Health Insurance Association and the other type managed by health insurance societies) as the health care insurance and the Employees’ Pension Insurance (厚生年金保険、KOUEI NENKIN HOKEN in Japanese) system as the pension insurance.

As for the self-employed workers and non-employed people, there are the National Health Insurance (国民健康保険、KOKUMIN KENKO HOKEN in Japanese) system and the National Pension (国民年金、KOKUMIN NENKIN、in Japanese) system.

Employees’ Health Insurance System and Employees’ Pension Insurance System

The Employees’ Health Insurance (EHI：健保) and the Employees’ Pension Insurance(EPI:厚生年金保険) are designed to help stabilize the living of company workers who pay income-based contributions, in case of old age, disability or death. EHI and the EPI are mandate by law, and it is not a contract which employers or workers may opt for the coverage or may withdraw. The EHI and the EPI cover by the unit of workplace (covered workplace). The employers are responsible for necessary procedures for coverage and pay insurance contributions which are evenly split by the employers and their employees.

Coverage

Compulsory Coverage

You must be covered by the EHI if you work for a company or a factory which employs 5 workers or more, or if you work for a corporation irrespective of your preference or nationality, in principal. Specifically, a company here means one in business specified by law, such as manufacturers. Foreign nationals permitted to work based on their resident status must also mandate the policies and be insured regardless of their nationality. If you are a part-time worker, you must be covered if your weekly work hours and monthly work days are three fourth or more of those for regular workers in the same workplace. If your work hours and work days are less than that, you still must be covered if your condition applies to the 5 followings: (1) your weekly work hours are 20 hours or more, (2) your employment is expected to be one year or longer, (3) your monthly wage is 88,000 yen or more, (4) you are not a student, and (5) you are employed by a “specific covered workplace”*.

*Specific covered workplace means:
(1) a workplace under one registered company number, which is expected to employ more than 500 workers in more than 6 months a year.
(2) a workplace with 500 workers or less, which apply for coverage on the agreement between the employer and the workers

How to Enroll in the System

Your employer must submit the “Application to Enroll in Employees’ Health Insurance / Employees’ Pension Insurance” (資格取得届-健康保険／厚生年金：SHIKAKU SHUTOKU TODOKE – KENKO HOKEN / KOSEI NENKIN) within 5 days after your employment, to the Japan Pension Service Branch Office (JPS Branch Office) or the Processing Centers which covers your office.

Coverage of Your family members

Your family members can apply for coverage if they are your first, second or third level of your family members or relatives and if they have registered their residence in japan*. To be approved as dependents to be covered, he/she needs to be financially supported mainly by you.
*Even without registered residence in japan, however, dependents who temporarily stay abroad may be applicable, e.g., students studying abroad, or family members who accompany insured workers dispatched to work abroad.

How to Enroll in the System

When your family members become eligible for coverage or disqualified for coverage,your employer must submit the “Application for family member Coverage” (被扶養者移動届　HIFUYOSHA IDO TODOKE) within 5 days after the change, to the JPS Branch Office or the Processing Centers which covers your company.

Contribution

The contribution are calculated by applying the same contribution rate to employees’ monthly salaries (Standard Monthly Remuneration*) and their bonuses (Standard Bonus Amount**), which are paid half by the employer and half by the employees.
The employer must deduct contribution from their monthly salaries and bonuses, and then pay the contribution (together with those paid by the employer) by the last day of the following month. (For example, contribution for April must be paid by May 31.)

* Standard Monthly Remuneration (monthly amount of pensionable remuneration)
The Standard Monthly Remuneration serves as the basis for calculating the benefits and insurance contributions for the EHI and the EPI. Your actual remuneration paid from the employer is classified into the prescribed remuneration table, and your Standard Monthly Remuneration is determined. Your remuneration includes every payment such as salary, wage and any allowance which you receive from your employer in return of your service performed. However, the bonus and such received at intervals of more than 3 months are excluded.

** Standard Bonus Amount
The Standard Bonus Amount is the amount of bonus you receive from your employer at intervals of more than 3 months, rounded down to the nearest \1,000. The maximum of the Standard Bonus Amount for the purpose of contribution calculation under the EHI is \5.73 million in total of bonus payments in one fiscal year (from 1 April to 31 March). The maximum Standard Bonus Amount under the EPI is \1.5 million per month.

*** Contribution rate
Contribution rates are specified separately for the EPI and the EHI.
EPI contribution amount table
(Please see the website of the Japan Health Insurance Association for EHI contribution)

(Note)
When you take maternity leave or childcare leave, both you and your employer may be exempt from contribution payments upon application.

Benefits

Old-age Employees’ Pension for age 60-64

If you have one year or more of EPI coverage periods and if you satisfy the contribution requirement to qualify for the Old-age Basic Pension under the National Pension system, you can receive the specially-provided Old-age Employees’ Pension from your pensionable age to 65. Currently, the pensionable age for this pension is 60 but this age is being raised in stages. Your pensionable age is determined according to your date of birth.

Benefit Amount

Annual amount of your specially-
provided Old-age Employees’ Pension = (A) + (B) + (C)
payable between age 60-64

(A) Fixed Amount Portion*
\1,628 × 1.001（revision rate for the fiscal year 2020）×multiplier depending on your date of birth **×Number of your covered months (up to 480***months)

* The pensionable age for the fixed amount portion is being raised in stages.
Your pensionable age is determined according to your date of birth.
** Please see here.（PDF　42KB）
*** This amount varies depending on your date of birth.

(B) Remuneration-related Portion
(a) + (b)

* Your Average Standard Monthly Remunerations of March 2003 and earlier, reassessed to the current value and divided by the number of your covered months including March 2003 and earlier.
** This amount varies depending on your date of birth.
*** Total of your Average Standard Monthly Remunerations and Standard Bonuses in April 2003 and later, reassessed to the current value and divided by the number of your covered months including April 2003 and later.

(C) Additional annual benefits
If you have 20 years of EPI coverage periods in total or 15 years after age 40 (age 35 for women) and if you have dependent family member when you reach pensionable age of the Fixed Amount Portion ((A) above), you can receive additional annual benefits. Dependent family members include;
(1) your dependent spouse younger than age 65
(2) your dependent child(ren) who has not yet reached first March 31 since his/her 18th birthday (20th if with certain grade of disability specified by law)

• ￥224,900 for your spouse*
• ￥224,900 each for your first and second child
• ￥75,000 each for your third and subsequent child(ren)

* Depending on your date of birth, special supplement for your dependent spouse may be added to this additional annual benefit.

How to Claim Your Benefit

To claim your benefit, you need to file the “Application for Pension : Old-age Benefits under National Pension / Employees’ Pension Insurance” (年金請求書：NENKIN SEIKYUSHO : 国民年金 / 厚生年金 / 厚生年金保険老齢給付　KOKUMIN NENKIN / KOSEI NENKIN HOKEN ROREI KYUFU) at the JPS Branch Office or Pension Consultation Center(PCC). You need to attach your Pension Handbook, a certified extract copy of your Family Registry and other necessary documents. Please contact the JPS Branch Office about specific documents, which may vary depending on your conditions.

Old-age Employees’ Pension for age 60-64 while you work

While you work, your specially-provided Old-age Employees’ Pension for age 60-64 will be either reduced or suspended if the total of your monthly Pension payable and your monthly remuneration from your work is more than ￥280,000.

Old-age Employees’ Pension for age 60-64 and Employment Insurance benefits

While you receive the Unemployment Basic Allowance paid under the Employment Insurance Act, your specially-provided Old-age Employees’ Pension for age 60-64 will be suspended.
While you work and receive the Older Workers’ Employment Continuation Benefits paid under the Employment Insurance Act, your Old-age Employees’ Pension amount is adjusted by considering your Benefits in addition to adjustment considering your salary.

Old-age Employees’ Pension after age 65

You can receive the Old-age Employees’ Pension on top of your Old-age Basic Pension at the age of 65, if you have a coverage period under the EPI system and if you satisfy contribution requirements to qualify for the Old-age Basic Pension under the National Pension system.

Benefit Amount

* Same formula as the specially-provided Old-age Employees’ Pension for age 60-64
** Equivalent to the difference, if any, between your “Fixed Amount Portion of the specially-provided Old-age Employees’ Pension for age 60-64” and your “Old-age Basic Pension amount”
*** Same formula as additional annual benefits of the specially-provided Old-age Employees’ Pension for age 60-64

Disability Employees’ Pension and Disability Allowance

You can receive the Disability Employees’ Pension or Disability Allowance (lump-sum payment) when you have a certain level of disability specified by law. To be eligible, you must be covered by the EPI system on the date of your first medical examination on the sickness or injury which caused above-mentioned disability. In addition, you need to satisfy contribution requirements to qualify for the Disability Basic Pension under the National Pension system. The eligible disability level ranges from Grade 1 to Grade 3 in the order of seriousness. In principle, if your disability level is assessed as Grade 1 or 2, you can receive both Disability Basic Pension and Disability Employees’ Pension. If your disability level is assessed as Grade 3, you can receive only the Disability Employees’ Pension.
If your disability level is lighter than Grade 3, you still may be eligible for the Disability Allowance (lump-sum payments).

Survivors’ Employees’ Pension

The deceased person’s survivors can receive the Survivors’ Employees’ Pension if they are financially dependent on a deceased person before his/her death and if one of the following applies at the time of his/her death:

• The deceased person is an insured person or is a previously insured person who dies within 5 years of his/her first medical examination of the sickness or injury. When he/she started suffering from the above- mentioned sickness or injury causing his/her death, he/she must be covered under the EPI system; The deceased person needs to satisfy contribution requirementsto qualify for the Survivors’ Basic Pension.
• The deceased person is eligible for the Old-age Employees’ Pension.
• The deceased person is eligible for the Disability Employees’ Pension (Grade1 or 2).

The spouse of the deceased who takes care of his/her dependent child(ren) or his/her child(ren) can receive the Survivors’ Employees’ Pension in addition to the Survivors’ Basic Pension.