Insurance is a subject considered important in Japan. There are mainly two kinds of insurance policies followed in Japan, with every Japanese resident holding at least one policy is mandatorily. The two main types of insurance predominant in Japan are the Employees Health Insurance (Kenko Hoken) and the National Health Insurance (Kokumin Kenko Hoken).
Social insurance comes under the blanket of the Employees Health Insurance and consists of Health Insurance, Social Pension, Nursing Insurance (for people aged between 40 to 65 years old) and Children upbringing. 50% of Social Insurance tax is deducted from the employee’s salary and the other 50% is paid on behalf of the company.
Since the tax on this insurance is paid a month in advance when they are due, it needs not to be paid by new joiners to the organization. Let us now look at the facets of Social Insurance.
- Health Insurance – As a part of the Social Insurance scheme, employees can access healthcare facilities and pay for just 30% of the medical cost, through an insurance card. Tax on health insurance depends on the income, region and is updated every 6 months. The basic formula for calculating the Health Insurance every month is Standard Monthly Salary × Health Insurance rate.
- Nursing Insurance – Nursing insurance provides assistance at home for people aged over 65. Calculated in the same formula as that of a Health Insurance, tax on Nursing Insurance is paid by an employee till the age of 64, at a standardized rate. The current tax rate on Nursing insurance lies at 1.73%, as of April 2019.
- Social Pension – Pension is paid to retired workers in Japan over the age of 65. The current pension rate stands at 18.30% with the cap on pension at a monthly salary of 635,000 Yen or more.
- Child Upbringing – This aspect of social insurance is borne solely by the company. It offers provisions beneficial for the upbringing of children. The current rate followed by companies is 0.34%, which is calculated over the monthly salary of the employee.
The Santei Kiso Todoke, also known as the Annual Social Insurance Report is submitted for renewal every July. It is undertaken by the employer to look into the employee’s monthly compensation, determine the changes (if any) and its subsequent effect on the social insurance remuneration. Once these are submitted by the employer between April-June, these figures stay fixed till August next year.
Insurance policies are a lifeguard that protects us in times of need. It is an asset, and a government that mandates insurance policy for its residents is certainly one that strives to keep its people safe and happy. The many facets of Social insurance cover for the basic needs of employees and their families, for a reasonable tax amount. Learning more about insurance policies in Japan can help you in understanding cover charges, inclusions, and exclusions of the scheme. All the best!