Social Insurance consists of:
- Health Insurance
- Social Pension
- Nursing Insurance added for people between 40 to 65 years old.
- Children Upbringing
Half of the Social Insurance tax is deducted from employee salary and the other half is paid by the company. The exception is the Children Upbringing tax which is paid only by company. Social insurance tax are paid the following month that thaey are due. Thus new employee do not pay Social Insurance on their first month of salary.
Health Insurance Benefits
Through inscription to Social Insurance, employees get a Social Insurance Card that allows them to go any medical facilities in Japan and pay only 30% of the medical fees.
Health Insurance tax calculation on salary
The Health Insurance is calculated by multiplying the standard monthly remuneration by the Social Insurance rate which is currently 9.97 % in the Tokyo area. It varies slightly depending on the region and the rate is updated regularly every 6 months.
Heath Insurance = Standard Monthly Salary × Health Insurance rate
The standard monthly salary is defined by calculating the average salary for the last 3 months and looking in a salary table where the average salary is. For example an employee whose average salary for the last 3 months was 305,000 JPY, will be in the salary level 290,000 JPY to 310,000 JPY and its standard salary will be 300,000 JPY.
There is a cap to the amount of health Insurance tax that is paid at 1,175,000 JPY as of April 2012. For average salaries of 1,175,000 JPY and above the standard salary is 1,210,000 JPY.
Nursing Insurance provide benefits like assistance at home for people aged 65 years and over.
Employees aged 40 to 64, have to pay an additional Nursing insurance tax. Current rate for the Nursing insurance is 1.58% (nationwide uniform rate) as of April 2015. It is calculated in the same manner as the Health Insurance
Social Pension benefits
Social Pension provide a Pension to people aged 65 Years and over. Calculation of the Pension to be paid to retirees is complex
Social Pension tax calculation
The calculation method of Social Pension tax is similar to Health Insurance.
Social Pension amount = Standard Monthly Salary × Pension rate
Current pension rate is 17.474% as of September 2014.
For Social Pension, the cap is for monthly salary of 605,000Yen or more.
Children Upbringing provides benefits to employees with children.
Children Upbringing is paid only by the company.
Children Upbringing amount = Standard Monthly Salary × Children Upbringing rate
Children Upbringing rate is 0.15%.
Same cap for salary 605,000 JPY and over applies as for pension.
Annual Social Insurance Report (Santei Kiso Todoke)
The annual social insurance report is submitted to the Japan pension service every July.
The employee’s monthly standard remuneration is re-determined every September to match the actual compensation the employee received. The employer submits the social insurance report in which the monthly compensation between April and June is stated.
As such, the new monthly standard remuneration, determined by the average compensation between the month of April and June, is then applied from the month of September (from October payroll).
Generally, this new monthly standard remuneration will be fixed until the August of the following year.
Disclaimer: This information is given for information purpose only . Companies should consult with a licensed social insurance consultant before making any decision