Health insurance gets more complicated with new visa law

By James Hadfield

It’s fascinating what you can learn about the country you live in from what they say about it overseas. Last year, the U.S. National Public Radio ran a glowing report on the state of Japan’s health care system. “So here’s a country with the longest life expectancy, excellent health results, no waiting lists and rock-bottom costs,” it gushed. “Hospital prices too low? That’s a problem a lot of countries would like.”

The sentiment has been echoed by other media outlets across the pond. As the debate about the future of American health care drags on, commentators are looking overseas to see how the rest of the world does things. And in Japan’s case, there seems to be a lot to like.

Yet it’s a system with which many foreigners living here seem uncomfortable, to say the least. We tiptoe around it with a mixture of trepidation and bewilderment, hampered in many cases by language and cultural barriers, but also by one other minor detail: a lot of us aren’t actually part of the system.

As most readers are probably aware, public health insurance is compulsory in Japan. Yet it’s an obligation that’s little enforced, and many foreign residents — and their employers — have managed to wriggle their way out of it.

New visa guideline tied to health insurance

That could all change from next year, though. On April 1, 2010, a new visa guideline will come into effect, which states that people applying to renew or change the status of their visa should provide proof that they’re enrolled in the public health insurance scheme. The Ministry of Justice quietly announced this back in March, but the first that most people heard about it was from a July 28 article in The Japan Times with the title “New law: no dues, no visa.” Only it wasn’t quite as simple as that. It seldom is.

Japan’s public health insurance system can be traced back to 1922, when the government passed a law that provided coverage to workers at mines, factories and transportation companies. The move was motivated in part by a need to redress some of the economic inequalities that had emerged after the Meiji Restoration. Though it started with laborers, the system would expand over the next few decades to incorporate more of the working population. At the same time, a national pension plan also began to take form, and a concerted push led to universal public health and pension coverage finally being achieved in 1961.

There are now two main forms of health insurance in Japan: employees’ health insurance, or “shakai hoken,” which is for salaried workers, and National Health Insurance, or “kokumin kenko hoken,” which is typically used by people who are self-employed, unemployed or retired. The two health insurance schemes are run separately, and differ in a number of respects. Kokumin kenko hoken is administered on a municipal level, and people enrolled on it must pay the entire premium themselves. Shakai hoken is overseen by the central Social Insurance Agency (SIA), and the cost of payments is split equally with employers.

The SIA is also in charge of pension schemes: the National Pension (kokumin nenkin), for people on kokumin kenko hoken, and Employees’ Pension Insurance (kosei nenkin hoken), for people on shakai hoken. Pension and health insurance payments are made at the same time, and cannot be paid separately.

The extent of coverage under each health insurance scheme has varied over time. When it was first introduced, shakai hoken covered the entire cost of medical treatment, as well as fifty percent of the costs for dependents. Kokumin kenko hoken, by contrast, initially covered only half of the medical costs for both the insured and their dependents. A revision of the health insurance law in 1973 raised these amounts to 70%, while also imposing an upper limit on the cost that could be borne by the insured. For people over the age of 70, health treatment became effectively free: the portion of the price that they were expected to pay was covered by public funds.

Since then, the government has struggled to reconcile the noble intentions of the welfare state with the uglier financial realities. Double-digit growth in medical expenditures during the ’70s inspired a series of cost-cutting measures the following decade. In 1984, people on shakai hoken were required for the first time to cover ten percent of their costs. This was raised to 20% in 1997, and then to 30% in 2003 — the highest such deductible in the world. Given the problems that the healthcare system faces in the future, a further rise is not unlikely.

So what does this mean if you’re paying into it yourself? That question’s easier to answer with shakai hoken, which is based on earnings and has standardized rates throughout the country. According to the SIA website, the combined health insurance, pension and unemployment insurance payment for someone making 300,000 yen per month comes to a little under 37,000 yen.

Predicting what the bill will be like for people on kokumin kenko hoken is tougher: while the National Pension costs a flat 14,660 yen per month, health insurance premiums are determined by the relevant municipality based on a person’s taxable income from the previous year. Though the combined insurance and pension payments often work out similar to those for people on shakai hoken, the premiums vary widely between regions, and can increase sharply over the years.

Compare that to the premiums offered by expat health insurers and the difference is striking. For instance, Viva Vida!, which claims to be the only officially registered health and life insurance company for foreigners living in Japan, provides coverage to adults aged 18-55 for less than 60,000 yen per year. Other insurers give similar rates, and with little enforcement, foreigners have been able to duck out of joining public health insurance schemes altogether in favor of private coverage. Sure, it may not be legit, but if it gets the job done, why complain?

Pension system a tough sell for foreigners

The pension scheme has also proved a tough sell for foreigners. It’s necessary to make payments for at least 25 years before you can draw a pension, and while people who leave Japan before then are entitled to reclaim some of the money they have paid in, the amount is capped at three years’ worth. To date, Japan has inked social security agreements with 10 countries in an attempt to address this issue, but even in these cases, it’s seldom a simple matter of transferring the pension payments to your home country.

If individuals have warmed to the idea of avoiding the system altogether, they aren’t alone. Companies are required to pay half the cost of shakai hoken, and many with foreign workforces have sought ways of shucking this responsibility. In 2005, it was revealed that Nova Corp, then the largest employer of foreigners in Japan, had not been enrolling its teachers on shakai hoken at all, saving itself an estimated 1 billion yen a year in premium payments. In an effort to wriggle out of the situation, the company changed its teacher’s contracts so that they would work for 29.5 hours a week, or just under 75% of the hours of a full-time worker—considered the magic cut-off point at which a company has to sign an employee up to shakai hoken.

The revelation came after the Osaka-based General Union filed a complaint with the SIA about Nova, among other companies. The union has spent the past few years vigorously campaigning for businesses to enroll their employees on shakai hoken, and schools including AEON have since complied.

“We believe that regardless of the shortfalls — and there are many — public health and pension insurance are important public policy measures, and that our members should have coverage,” explains Dennis Tesolat, the GU’s General Secretary. “When we started our campaign back in 2004, one of our main points was that things would definitely change regarding health and pension coverage for foreigners, and that it’s something we had to deal with sooner rather than later.”

As it turns out, they were right. In June 2007, the Council for Regulatory Reform released one of many three-year plans for promoting reform. Buried in this tortuously phrased slab of bureaucratese is the recommendation that, along with payment of taxes, family situation and Japanese ability, the Immigration Bureau take into account whether or not foreigners are enrolled on public health insurance.

The new visa guideline was created in response to the report’s recommendations. Though it was initially reported as being a simple case of “no dues, no visa,” the actual situation is more complicated than that. A PR spokesperson at the General Affairs Division of the Immigration Bureau, who declined to give her name, sounded genuinely surprised that the issue had garnered as much attention as it had.

“Legally, if someone isn’t working, they won’t be able to get a work visa, but somebody won’t be refused permission just because they aren’t signed up to shakai hoken,” she explained. “If somebody doesn’t show their [insurance card], they aren’t going to get denied permission. They’ll just be asked why they don’t have one.”

That’s it? “Yes.”

Not exactly deportation, is it? Still, the guideline promises to introduce yet another gray area into an already opaque process, and some may prefer not to take their chances.

“It would appear that they want to use the guideline as a tool to disqualify those that an individual immigration official might feel doesn’t belong here,” says Ronald Kessler, the chairman and founder of the Free Choice Foundation. “In my opinion, the last thing in the world they’re actually thinking about is our health and welfare.”

Free Choice has been waging a high-profile campaign against the new guideline, running adverts in English-language newspapers and other publications, including this one.

“While Japan’s universal health care program is basically a good system, it was created with Japanese citizens in mind — as well it should be,” Kessler explains. “But, let’s face it: no one shoe fits every foot. With regard to health care, foreigners are typically confronted with problems that Japanese citizens are not.” He cites repatriation of remains, which can cost 1-2 million yen, as an example. “Who pays for this? It’s certainly not public insurance.”

In its adverts, Free Choice says that using immigration to enforce enrollment “takes the humanity out of medicine.” It hopes to secure a new guideline that explicitly allows foreigners to choose between public and private insurance plans.

The GU’s Tesolat disagrees. “The point they fail to mention is that it’s not a choice issue,” he says. “Public insurance only works when everyone is in the same system.”

While Free Choice works to reverse the decision, the GU is negotiating with the relevant government agencies to put pressure on companies to enroll employees in shakai hoken. Tesolat expresses concern that when the new guideline comes into effect next year, people may be forced by their company’s intransigence to enroll on kokumin kenko hoken, thus losing out on key benefits of shakai hoken such as wage protection. More importantly, anyone enrolling on kokumin kenko hoken must cover back payments for up to two years — a cost that is borne by the company in the case of shakai hoken.

So what’s the best option? Frustratingly, it’s still hard to say. What seemed in the summer like a simple choice — sign up or go home — has turned out to be a lot less clear-cut. Whatever the fairness of the new guideline, its vagueness about implementation leaves foreigners in an awkward position. Take the plunge, or take your chances.

For more information, see:

Free Choice Foundation (www.freechoice.jp)
General Union (www.generalunion.org)
Nambu Foreign Workers Cacus (http://nambufwc.org/)
Social Insurance Agency (www.sia.go.jp/e)

There may be trouble ahead…

On paper, Japan’s health care system is pretty remarkable, promising universal coverage at a low cost: according to the latest WHO statistics, health expenditures account for 8% of GDP, compared with over 15% in the U.S. However, a report released by McKinsey & Company last November identified a number of problems which were “threatening the sustainability” of the system.

A spate of high-profile cases in which patients died after being turned away from multiple hospitals have highlighted the shortage of physicians, especially in ERs. However, the McKinsey report argues that overworking of specialists, a lack of financial incentives for hospitals to provide emergency care, and inappropriate use of ERs by the general public are also to blame for such incidents. Other more general problems include weak incentives to improve quality, a lack of clear accreditation standards for doctors, and over-utilization of health care: the average Japanese patient sees a doctor 14 times a year, compared to five times in the UK and four in the U.S.

Then there’s the issue of Japan’s every-grayer population. As the proportion of elderly people rises, health costs are predicted to increase substantially, just as the labor force — and the number of people paying into the insurance and pension schemes — is shrinking.

This story originally appeared in Metropolis magazine (www.metropolis.co.jp)

› Login to comment

Latest 15 of 90 Total Comments Show All

Nessie at 04:03 PM JST - 15th October

For the love of all that is holy and religious, we people please STOP refering to the pension system as a "gaijin tax"?

A giajin surcharge, then.
chuckers at 10:06 PM JST - 15th October

A giajin surcharge, then.

That would be incorrect as well. The payments required to the pension plan are required by all individuals between the ages of 20 and 60 living in Japan. Exemptions are made for students and low income individuals.

In fact, a family of 4 can make up to 3.35 million yen a year and only need pay 3/4 of the required amount into the pension system.

The pension system is NOT a tax nor a surcharge on gaijin. It applies to everyone in Japan.
chuckers at 11:08 PM JST - 15th October

Re: Tax amount

I just dug out my pay slip from last month.

Background: Salaryman in Tokyo 2 dependents Make considerably more than an English teacher

Break down as follows:

Health insurance: 3.2% Pension: 3.4% Unemployment insurance: 0.4% Total Shakai hoken: 7%

Income tax: 14.25% Inhabitance tax: 7.9%

Total tax: 22.15%

Net vs. Gross salary: 29%

Claims of 50% taxation are a bit silly.
Nessie at 11:36 PM JST - 15th October

The pension system is NOT a tax nor a surcharge on gaijin. It applies to everyone in Japan.

But not everyone receives the benefits. Japanese recipients receive disproportional large benefits for both pensions and healthcare. It's a non-refundable deposit that few foreigners will ever be able to redeem.
GJDailleult at 09:02 AM JST - 16th October

@chuckers- Who pays the pension premiums is not the issue. It's a gaijin tax because foreigners don't receive the benefits (except in very rare cases) and receive only partial or no refunds on their payments, while Japanese payers will (hopefully) be able to receive the benefits when they are pensionable age. Paying into a benefit plan when you can't receive the benefits is a tax, not a pension plan.
chuckers at 10:08 AM JST - 16th October

If you think you aren't going to be be receiving it, then talk to your home country about forging an equalisation treaty with Japan. Many countries have such agreements:

http://www.sia.go.jp/seido/kyotei/system/index.html

Germany, US, Belgium, Australia, France, Canada, Austria, The Netherlands, the Czech Republic all have agreements with Japan that payments into the Japnese system count towards receiving pension for either country. Members of those countries DO NOT LOSE BENEFITS by paying into the Japanese system. They are able to claim Japanese pension once they have met the 25 year period WHICH INCLUDES WORK IN THEIR HOME COUNTRY.

UK citizens are allowed apply for a 5 year exemption from payments into the Japanese system if they apply for it.

If you are not from one of those countries, lobby your home country for equalisation or don't come to Japan if you are going to break the local laws.

Japanese recipients do NOT receive a "disproportional large benefit" from this because they are paying into it longer. The one's making a disproportional benefit are those people skirting the law and not paying what they owe.

These laws apply to Japanese and foreginers alike. The only difference is that foreigners are allowed to ask for a 3 year capped refund, provided they leave Japan and apply for it. Locals don't have that option. Is that fair?

The pension system is not a tax on gaijin. Period.
Patrick Smash at 11:36 AM JST - 16th October

chuckers, even those from countries with treaties lose out massively as there is no direct reciprocation. With the UK for example, it is not 1:1, it is heavily slanted. If you leave after 3 years, you only get back part of what you pay, probably betwen 2-2.5 years of your payments at the moment, but on its way down as the money runs out. Otherwise you are massively hit if you don't complete the 25-year minimum regardless of where you're from. I think nigelboy has the figures, and the reasons for it may be foreign governments rather than the Japanese one.

I thought of something else though, and I wonder what people think.

The Japanese government is going to scrap re-entry permits, and raise the visa period from 3 years to 5, at least that's what they are saying. If you apply for a visa overseas, you cannot be signed onto the national insurance systems at that stage, and so surely you get your 5-year visa from the Embassy without being on social insurance.

The point is, is forcing foreigners to pay connected to visa renewal or the new gaijin cards? If it's only visa renewal, the foreigners who leave within 5 years won't have to end up on the system. So all those SE Asian factory workers etc. could end up having a 5-year spell in Japan and never having to pay in. That seems very fair. If they decide to stay long term, renew visas etc., they would have to start paying and pay back 2 years of contributions. Again, not greatly unfair. But if it's to get the new and improved gaijin card tracking devices (zairyu), then everyone just gets clobbered.
chuckers at 12:52 PM JST - 16th October

http://www.sia.go.jp/e/manual/contents-3.html

http://ukinjapan.fco.gov.uk/en/working-with-japan/uk-japan-relations/social-security-agreement/further-details-for-employees

UK persons should apply for a certificate for an exemption from the Japanese system if they want to opt out. They are eligible for a 5 year exemption with possible extension provided they are paying into their system back home.

Are you paying into the NI system "back home" Patrick?

If you find these terms unfair, lobby your member of parliment to get the agreement amended into something more favourable.

I have about 5 more years to go before I am to be considered vested in the Japanese system. I won't have paid into it for that entire period but would still be eligible. Pull out of it for a measly 3 years worth of capped contributions is unfathomable to me.
Patrick Smash at 01:31 PM JST - 16th October

chuckers,

I met my local Lib Dem MP a few years ago, and most unfortunately he doesn't give a toss about my opinions. Arguing that everyone should lobby their MPs for more favourable treatment in Japan is a bit unrealistic.

I still want to know what happens when we get our new gilt-edged gaijin cards with the tracking devices in, and what difference that will make. Does anyone know?
chuckers at 02:29 PM JST - 16th October

gilt-edged gaijin cards with the tracking devices in, and what difference that will make.

Personally, I don't think it will make a whole lot of difference at all.

Many people are screaming and yelling about the "tracking devices." My PASMO card does a better job of keep track of my whereabouts. At least as long as I am on a train line. My mobile phone can easily be pinpointed throughout the country and it is with me about as often as my current gaijin card.

Tracking my whereabouts with the new gaijin cards would take a huge cost in infrastructure by setting up antenna everywhere. Pretty sure that didn't happen. And using current phone antennae would probably not be technically possible.

My DL already has an IC chip in it also, so big deal.

Others are claiming the local cop shops are going to be scanning every foreigner walking by for RFID info. The local constabulary may have copious amounts of time, but honestly, I don't think they have THAT much free time. I am going to keep walking by my local koban every morning on the way to work without so much as a second thought. After the new cards are issued, I will probably be accosted by the boys in blue about as much as I am now. I.e. not at all.

Anyone still desparately paranoid about it can always cut a corner out of their tin foil hats and wrap their wallets in it. And, truth be told, I already have a small sheet of aluminium foil in my wallet in an effort to keep credit card skimmers from scanning my butt in crowded trains.

If that isn't enough, start booking your tickets.
W505a at 07:02 PM JST - 16th October

Hoofin says he thinks it will be based on on what the new Labor Minister (Nagatsuma?) does with all the changes to the Japanese system. They might merge all the health and pension programs.

In such an environment, I wouldn't go down to the immigration without an NHI card or employer coverage, but that's just me.
McC72 at 02:12 PM JST - 18th October

I have been coming back many times to read comments about this particular subject for some time but it seems no one is addressing my concern. I'm in my 20s and just don't want to pay for any health insurance/pension. Need to state that I'm not an english teacher. I'm OK without it. Just sdon't need any. Anyway to keep my plan?
cleo at 04:18 PM JST - 18th October

I'm in my 20s and just don't want to pay for any health insurance/pension. Need to state that I'm not an english teacher. I'm OK without it. Just sdon't need any.

I think your question has been answered, many times. The whole point of insurance is that you pay in when you don't need it, so that you can draw out when you do. 'I'm alright Jack' doesn't work. Be thankful you've got your youth and health, and stump up your fair share.

Anyway to keep my plan?

You could try moving to a place where they don't have a fully comprehensive national health insurance /pension scheme, and start saving like billio for that inevitable rainy day.

No need at all to state whether you're an English teacher or not, it's neither here nor there.
0letstalk at 04:15 PM JST - 24th October

Work visa can be issued only for full-timers. Full-timers must be enrolled in shakai hoken. This J-government must be logical. If they issue work visas for full-timers, the employers-sponsors must enroll their full-time employees in shakai hoken and present the relevant papers for visa renewals. Now with this new law the J-government again puts all burden on individuals, not on companies.
tigerguy at 11:13 PM JST - 30th October

Yes the labor office should definitely check out and investigate these illegal and blacklisted companies and do something about it.