Controversy brewing over visa-health insurance link

By Terrie Lloyd

A revision to the immigration law passed in the Diet earlier this year has caused the Ministry of Justice to instruct the Immigration Bureau to start checking that foreign residents in Japan are enrolled in one of the nation’s health insurance programs. Although not stated explicitly, the implication is that those without such enrollment may be denied a visa renewal. This will start happening from April 1, 2010 and has a lot of foreigners concerned.

The reason for this concern is that although all residents of Japan, including foreigners, are supposed to be enrolled in one of the health insurance programs, and indeed, in one of the overall social insurance programs, the reality is that many people are not. Most such people are typically either self-employed, contractors, students, part-timers, unemployed people between jobs or housewives (ie, all outside the regular employee situation).

I have been following the various media and chat boards about the topic, and the conversations seem to follow three main threads: that the Japanese insurance program is unwanted and unfair to foreigners, that it is discriminatory vis-a-vis Japanese non-payers, and that come April 1, what can people do about it?

Most of us know the health insurance program through a collective social insurance package that most private companies are enrolled in, called “shakai hoken.” This refers to health (“kenko hoken”), pension (“kosei nenkin”), unemployment (“koyo hoken”) and nursing (“kaigo hoken”—for those over 40) insurances. Effectively for most of us, these insurances function as a 16% tax, and result in us getting that much less in our take-home pay packets every month. Our employers also pay out the same 16% to the government as their contribution.

Thus, for those of us on lower-to-medium salaries (say, 300,000 yen a month), while you may think you’re only paying out 20% or so for your payroll taxes (being 10%-12% average for national tax and 10% or so for your local residence tax), in actual fact, the real number is more like 38%. If you’re in the higher tax brackets, then this number goes much higher—into the 45%+ range.

As many readers will know, there are four main social insurance programs of which health insurance is part: the “shakai hoken” program which most private companies are subscribed to, the “kokumin hoken” program, which is for people not in regular employment or who are self-employed, private insurance programs which are run by a few major Japanese conglomerates, and a government employee program. For most of us, getting a visa renewal will mean being enrolled in either the “shakai hoken” or “kokumin hoken” programs.

Come April 1 next year, what can you do if you are not currently a contributor to social insurance? We contacted the Immigration Bureau to ask this question, and from what we can tell, they themselves have not yet settled on a policy of how to handle non-compliant people. They did say that they will only be checking for health insurance certificates, not pension and other insurances. So I suppose that the simplest answer is to go get yourself enrolled now in the “kokumin kenko hoken” program. However, since there are a number of exemption categories for “kenko hoken” (working in a company of less than five people, for example), I suppose it might be possible to present yourself as being an exempt person, with, I think, some chance of being able to convince the interviewing officer that your visa should be renewed. But is it really worth all the risk and hassle?

So how is it that people have been allowed to get away with not paying in health and other social welfare taxes until now? There doesn’t seem to be an official reason. However, I believe it is because the government for the longest time held that the social insurance package was NOT a tax but rather a benefit, which is why it has not been administrated by the National Tax Agency. This duality of positioning caused the Social Insurance Agency (SIA) to be run differently, and unlike the Tax Agency, has for many decades decided for itself whether to make people pay or not. As we all know, this has changed over the last five years, as it came to light that the SIA not only let people off having to pay, but also themselves lost 50 million or so contributor records.

It seems that the new government position is that the SIA, once it has been reorganized into a new agency next year, will function more like the National Tax Agency. Indeed, I think that within 5-10 years, the two will be merged, and then the Japanese public will be faced with the reality that social insurance really is a tax, not just a pretend one.

So you’re stuck with having to pay at least something. The good news is that if you’re self-employed, a contractor, or a student, you can pay directly to the government, and the rates are not all that unreasonable—certainly the overall cost of social insurance is significantly cheaper than if you’re a regular salaryperson.

As a general guide: “kokumin nenkin (national pension)—14,660 yen/month currently; “kokumin kenko hoken” (national health insurance)—roughly about 9%. Actual premium is based on your previous year’s taxable income and number of dependents. Annual premiums range up to 530,000 yen/year (44,166 yen/month); “kaigo hoken”—only paid by those over 40. Levied as portion of previous year’s taxable income, up to 90,000 yen/year.

Lastly, is the threat of withholding a foreigner’s visa renewal if they don’t pay their social insurance fair? My guess is that this point may eventually be taken to court by someone caught by the new rule. It is clear that social insurance is NOT a tax yet, and in June this year the Nikkei ran an article saying that the Social Insurance Agency had a contributor compliance rate for Japanese citizens for national pension of just 62.1% (no word on the
health rate)—so obviously there are plenty of Japanese not paying in to the system. Yet, I don’t hear of anyone being punished for that. In fact, just the opposite. The agency allows people who are on low wages to only pay a portion of their obligations, and so the real non-full compliance rate for social insurance is just 45.6%.

Bad luck if you’re a foreigner… you don’t get to choose.

Terrie Lloyd writes a weekly newsletter for entrepreneurs and business people about business and political opportunities in Japan.

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Latest 15 of 25 Total Comments Show All

Osakadaz at 12:08 PM JST - 30th September

I was asked to backpay my shitsugyo hoken fees but the school did it as it was their mistake.
GW at 12:16 PM JST - 30th September

Osakadaz,

hope things are better for you 2nd time round, I have been here almost 20yrs now, I cant really complain but I do anyway haha. I just get ticked when I see my taxes & health ins wasted so much, I can put up with some waste but the corruption & scams here just waste I wud say around 30-40% of what I pay imo.

With the little one on the way you have a tough decision to make as to whether to stay or go, if it were me I wud push for leaving Jpn. Thankfully the mrs & I dont have kids, hope yr wife is understanding in that regard, when the mrs & I talk "what ifs" she often says we shud go somewhere where we are both gaijin so maybe we shud go to Oz haha, H`mmm my sister is just finishing med scholl there maybe we cud get free or discounted operations etc if we got really ill..........I digress
sk4ek at 02:58 PM JST - 30th September

Read the article in the Japan Times this week on the subject. The health insurance "requirement" is neither a requirement nor even a law, at this point--it's a guideline, one of many that factor into the decision to give or withhold a visa. The article also raises some good points--that private health insurance for expats offers coverage for care (including the disposition of your remains should you die while in Japan) that isn't available under national health insurance, and that in some other countries, showing proof of health insurance, public or private, is often sufficient to fulfill visa requirements.

Since I am self-employed, I need to apply for coverage at my local city office, but like many others, I am leery of the backpayment requirement, especially in this economy with money so tight... still, I've only been lucky to have stayed healthy over the past ten years, statistically I could end up in the hospital at any time, so it makes sense to get covered anyway.
Osakadaz at 03:28 PM JST - 30th September

ＧＷ＞　give it a whirl mate! :)haha! tetsukon> exactly!! from what I hear, the YMCA does this too..I know quite a few people lacking healthcare (and dental care) because of this.

and sk4ek> don't want to frighten you mate,but 8 days in hospital last month cost my wife 101,000 yen before her hoken rebate (which is pretty crappy anyway) so if you do get sick you might be in for a big bill if you are hospitalised.You should at least look into private medical care with amex or Daichi seimei or the like,if you are going to try to avoid the hoken fees.
GW at 05:52 PM JST - 30th September

Thats another thing, the J-health insurance DOESNT cover a lot of stuff, if you get cancer you had better have supplementary insurance otherwise you will be in for a shock for what you owe on the operation & wait till the hospital bills you for room & board, thats right yr J-hoken doesnt cover much if any of this.

If you get hospitalized & you dont have supplementary private insurance you will be out of pocket for serious $$$$
WMD at 07:40 PM JST - 30th September

So if I've got it right, from next year visa holders must show proof of health insurance for renewal but most teachers work for companies that refuse them insurance?? Even though it's a legal requirement. Why the hell is the japanese government not cracking down hard with fines/prison time on these law breaking companies?? I guess as foreigners can't vote they don't give a damn. Looks like things are heading for meltdown next year.
tokyochris at 08:04 PM JST - 30th September

Even though it's a legal requirement

There are ways for companies to get around it... For example, the English school I work for has teachers contracted for less than 20 hours a week (or on 'temporary' 12month contracts) and everything else is classed as 'optional overtime' so they have no obligation to pay into the scheme.

I would imagine others are doing the same
farhaan at 12:29 AM JST - 1st October

I am really against it since I came to Japan and I stopped paying insurance (hoken) and pension (nenkin) two years back.

OK GUYS. WHY DON'T WE BECOME ONE AND FIGHT AGAINST IT.
bdiego at 03:55 AM JST - 1st October

Interesting to see the tax brackets work out to be about the same as the US (SS + Medicare tax). If it makes you feel better, simply living in California or Hawaii gets you taxed harder than anywhere in Japan or the other 48 states of the US.
nigelboy at 06:03 AM JST - 1st October

So if I've got it right, from next year visa holders must show proof of health insurance for renewal but most teachers work for companies that refuse them insurance?? Even though it's a legal requirement

No. Most "teachers" work for companies that do not require them to provide one for their employees ("teachers"). So you are legally required to get your own through Kokumin Hoken but it appears these "teachers" failed to do so hence passing the blame to companies, Japanese government, and whatever entity other than yourself.
tokyochris at 10:27 AM JST - 1st October

So you are legally required to get your own through Kokumin Hoken but it appears these "teachers" failed to do so hence passing the blame to companies

Exactly right, it's upto the individual to get down to their ward office and sign up to kokumin hoken
beowulf at 10:39 AM JST - 1st October

No. Most "teachers" work for companies that do not require them to provide one for their employees ("teachers"). So you are legally required to get your own through Kokumin Hoken but it appears these "teachers" failed to do so hence passing the blame to companies, Japanese government, and whatever entity other than yourself.

I do believe that some teachers have deliberately ignored getting Kokumin Hoken. But as these companies are the teacher's visa sponsor I think they could play a greater role in explaining (to new teacher's in particular) what is expected of them regarding health insurance in Japan.
tmarie at 12:16 PM JST - 1st October

Companies fail at telling their employees about this - and giving them time to go and do it. Japan needs to change the laws on this with regards to PT work and whatnot. If they want our money they should have a support system where the companies have to help pay for it or just be done with wanting everyone to pay. Rather unfair that some companies pay, some don't and the government doesn't enforce payments from companiees who should be paying!
tokyochris at 01:33 PM JST - 1st October

OK GUYS. WHY DON'T WE BECOME ONE AND FIGHT AGAINST IT

Because you won't win and will probably just get deported for trying to cause trouble ;-)
nigelboy at 12:03 AM JST - 2nd October

Companies fail at telling their employees about this - and giving them time to go and do it. Japan needs to change the laws on this with regards to PT work and whatnot. If they want our money they should have a support system where the companies have to help pay for it or just be done with wanting everyone to pay. Rather unfair that some companies pay, some don't and the government doesn't enforce payments from companiees who should be paying!

I don't think so. If you're in a profession/job where the employer if offering you to pay half of the medical insurance, it means that they value your employment. If they don't, it's most likely that your job/profession are dime of dozen where you can be replaced easily. Same here with U.S. where medical benefits and 401K matching by employers are offered as "perks" to hire people or to maintain their current employee. If the employer doesn't offer you this, most likely your job fits the "dime of dozen" scenario. Wake up and stop over valuing your "profession"