Employees’ Health Insurance in Japan, Explained
Wondering if your new business is obligated to cover health insurance for your employees? Here’s what every business owner ought to know about employees’ health insurance 健康保険 = kenkou hoken in Japan.
In principle, all residents and citizens of Japan must enroll in the public health insurance system.
While this article focuses on employees’ health insurance in Japan, there are 4 additional types of insurance that business owners must be aware of:
Workers' Accident Compensation Insurance 労災保険（労働者災害補償保険）= rousai hoken
Employment Insurance 雇用保険 = koyou hoken
Employees’ Pension Insurance 厚生年金保険 = kou sei nenkin hoken
Nursing Care Insurance 介護保険 = kaigo hoken
Note: Workers' Accident Compensation Insurance and Employment Insurance are often referred to as 労働保険 = roudou hoken "labor insurance." And Employees’ Pension Insurance, Employees’ Health Insurance, and Nursing Care Insurance are referred together as 社会保険 = shakai hoken “social insurance.”
Today, we will be covering 健康保険 = kenkou hoken for employees in Japan. Stay tuned for upcoming articles on the other insurance types for employees.
Employees’ health insurance at a glance
The beginnings of Japan’s health insurance system was influenced by social systems in Denmark, Sweden, and Germany.
According to Japan Health Policy Now (JHPN), “The concept of the Health Insurance Act itself dates back to the 1890s, when Minister of Home Affairs Shinpei Goto started discussions within the government after recently returning to Japan from a study trip to Germany.”
Upon Goto’s return, other factors took precedence, and it wasn’t until 1938 that the foundations of Japan’s current National Health Insurance system were enacted.
Today, employees’ health insurance premiums are split evenly between employers and employees, with the employees’ portion taken directly out of their paycheck.
If/when an employee requires medical attention, the government subsidizes the cost of approx. 70 percent of medical bills, the remaining 30 percent of which is paid by the employee.
How to determine if your business must cover employees’ health insurance
Business establishments that are obliged to pay for employees’ social insurance (which includes employees’ health insurance) are referred to as 強制適用事業所 = kyousei tekiyou jigyou sho, compulsory business establishments, which have the following applicability guidelines:
Businesses of national, local public bodies and corporations
Business establishments that employ more than 5 people. Workers who work at the place are enrolled (even for part-time workers, if the working hours per day or week and the prescribed number of working days per month are three-quarters or more of normal workers). Applicable to the following industries: a. Manufacturing; b. Civil Engineering; Construction; c. Mining; d. Electricity, Gas; e. Transportation; f. Janitorial, Commercial Cleaning; g. Merchandizing; h. Finance, Insurance; i. Storage, Rental; j. Intermediary, Brokerage; k. Collecting, Guidance, Advertising; l. Education, Research; m. Medical, Health; n. Communication, News
For all other businesses that do not fall under the aforementioned criteria, employee enrollment is voluntary and is referred to as 任意適用事業所 = ninni tekiyou jigyousho, voluntary application establishments. Further explanation on these two category types can be found here.
How to determine if your employees are eligible for employees’ health insurance
Even if your business is mandated to cover employees’ health insurance, employees themselves have eligibility requirements as well.
At present, the following are the current eligibility guidelines for employees.
Employee works 20 hours or more each week
Employee earns 88,000 yen or more per month (over 1,060,000 yen per year)
*Not applicable for employees who are students
Expected employment period of 1 year or more
Company in question has 501 or more employees
The current eligibility guidelines will change in October 2022 to the following:
Employee works 20 hours or more each week
Employee earns 88,000 yen or more per month (over 1,060,000 yen per year)
*Not applicable for employees who are students
NEW: Expected employment period of 2 months or more
NEW: Company in question has 101 or more employees
The eligibility requirements will change once again in October 2024 to the following:
Employee works 20 hours or more each week
Employee earns 88,000 yen or more per month (over 1,060,000 yen per year)
*Not applicable for employees who are students
Expected employment period of 2 months or more
NEW: Company in question has 51 or more employees
For a full understanding of the changes enacted in the May 2020 law, refer to this report (Japanese) from the MHLW.
Additionally, keep in mind the Japan Pension Service states, “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.”
How much will it cost to enroll in employees’ health insurance?
Health premiums for employees’ health insurance roughly follow this calculation: standard monthly salary x insurance premium rate = health insurance premium.
*Standard monthly salary
Employees’ standard monthly wage also includes “position allowance, weighting allowance, dependent family allowance, commuting allowance, housing allowance, overtime allowance, and any cash or items given as payment for labor. Furthermore, bonuses paid 4 or more times per year also count as part of the standard monthly salary,” according to this page (Japanese) on the Japan Health Insurance Association (JHIA) site.
Note: Calculating the standard monthly salary is complex and can be confusing. When monthly salary increases or decreases (such as, when an employee takes maternity leave or childcare leave), causing the salary amount to move into a different grade or level, then the health insurance premium must be recalculated. Please refer to this freee.jp article (Japanese) for further details.
*The insurance premium rate
The insurance premium rate differs from prefecture to prefecture and is updated yearly. To find out the health insurance premium rate for Reiwa 3 for the prefecture in which your business operates, refer to this page (Japanese) on the JHIA site.
To provide you with an example, as of Reiwa 3, Tokyo’s health insurance rate stands at 9.84%. So, here’s what the calculation would look like:
Standard monthly salary (350,000 yen) x insurance premium rate (9.84%) = health insurance premium*
(*split evenly between employer and employee)
How to enroll in employees’ health insurance
Businesses that are compulsorily mandated to enroll in employees’ health insurance should submit the designated applications to the Japan Pension Service within 5 days of establishment.
The following applications must be submitted either by mail or at a Japan Pension Service window or electronically (e-submissions are mandatory for large companies). Employees’ health insurance application forms are accessible here (Japanese). Note: These documents are the same application forms to apply for employees' pension insurance because if you are applying for employees' health insurance, you will also be required to apply for employees' pension insurance as well (this applies to enterprises that voluntarily enroll employees in social insurance).
Notification of New Application for Health Insurance and Employee's Pension 健康保険・厚生年金保険新規適用届 kenkouhoken・kouseinenkin hoken shinki tekiyou todoke (See here for a tentative translation of this form provided by Japan Pension Service)
Notification of the Acquisition of Eligibility 被保険者資格取得届 hihokensha shikaku shutoku todoke (See here for a tentative translation of this form provided by Japan Pension Service)
Notification of eligible dependents 被扶養者（異動）届（国民年金第3号被保険者関係届）hifuyousha (idou) todoke (kokumin nenkin dai 3 gou hihokensha kankeitodoke) (See here for a tentative translation of this form provided by Japan Pension Service)
Application of Registering Bank Account for Insurance Fee Payments 保険料口座振替納付（変更）申出書 hokenryou kouzafurikae noufu (henkou) moushidesho
Keep in mind, each time you hire a new employee who is eligible for employees’ health insurance, you must also submit Notification of New Application for Health Insurance and Employee's Pension「健康保険・厚生年金保険被保険者資格取得届」within 5 days of the hiring date to the Japan Pension Service Office.
Regarding employees’ health insurance coverage of dependents, the Japan Pension Service provides an English-language explanation of the dependents eligible to be covered in this article (Section: “Coverage of Your Dependents”).
Image: Japan Pension Service
Closing thoughts
Employees’ health insurance is just one type of insurance that certain businesses are compulsorily obligated to enroll in.
You may recall, 社会保険 = shakai hoken “social insurance” collectively refers to Employees’ Pension Insurance, Employees’ Health Insurance, and Nursing Care Insurance.
Stay tuned for upcoming articles that cover the remaining insurance types for employees that business owners should be aware of.
Please note: If your business is mandated to enroll employees in health insurance but you fail to do so, this can lead to penalties that may include up to six months of imprisonment or paying a 500,000 yen fine.
For further rules and regulations regarding hiring workers and the various insurance plans to enroll in, refer to this page (Japanese) by the Ministry of Health, Labour and Welfare (MHLW).
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