What is Social Insurance Premium?
In Japan, 'social insurance premium' refers to the cost paid to enroll in social insurance, including health insurance, pension insurance, employment insurance, and workers' accident compensation insurance.
It is a system designed to prepare for medical expenses, retirement, unemployment, and industrial accidents. Most citizens are required to enroll.
Types of Social Insurance
- Health Insurance: Reduces medical expenses, supports childbirth and childcare, etc.
- National Pension, Employees’ Pension, Employment Insurance, Workers' Accident Compensation Insurance, etc.
Health Insurance
For employees, insurance premiums are calculated based on the standard monthly remuneration, with both the company and the employee sharing the cost equally.
Self-employed individuals and freelancers join the National Health Insurance, and their premiums are determined based on income.
Total Insurance Rate
Set at around 10%, varying by region and insurance association.
Example of Health Insurance Premium
If the monthly salary is 300,000 yen, the health insurance premium is about 30,000 yen, with the employee paying half (15,000 yen).
National Pension & Employees' Pension
In Japan, all citizens aged 20 to 59 must enroll in the National Pension.
Employees are automatically enrolled in the Employees' Pension as well, allowing them to receive pension benefits along with the National Pension.
Employees’ Pension Insurance Rate
Approximately 18.3%, shared equally between the company and the employee.
Self-employed individuals only enroll in the National Pension and pay a fixed monthly amount (about 16,000 to 17,000 yen).
Example of Pension Insurance Premium
If the standard monthly remuneration is 300,000 yen, the total Employees' Pension premium is about 54,900 yen, with the employee paying approximately 27,450 yen.
Employment Insurance
This system provides financial support during periods of unemployment, childcare leave, or nursing care leave when an individual cannot receive a salary.
In particular, childcare leave benefits help employees focus on childcare without quitting their jobs.
For employees, premiums are deducted directly from their salaries, with rates varying by industry and job type.
Employment Insurance Premium Calculation
Monthly salary (including bonuses) × insurance rate (about 0.3% to 0.9%, depending on the industry).
Example of Employment Insurance Premium
If the monthly salary is 300,000 yen and the insurance rate is 0.6%, the employment insurance premium is 1,800 yen, with part of the cost covered by the company.
Workers' Accident Compensation Insurance
This system provides compensation for medical expenses, leave compensation benefits, and disability pension in case of workplace accidents or illnesses.
Workers' Accident Compensation Insurance
Employees do not pay premiums, as the company covers the entire cost.
How to Pay Insurance Premiums
For employees, premiums are automatically deducted from their salaries by the company, so no additional payment procedures are required.
However, self-employed individuals and freelancers must report and pay their National Health Insurance and National Pension premiums, so it is essential to check their income reports and payment deadlines carefully.
Importance of Social Insurance Premiums
Although social insurance premiums may feel burdensome,
they provide significant benefits such as reduced medical expenses, retirement security, and protection against unemployment and workplace accidents.
Failure to pay may result in late fees or even affect pension eligibility in the long run,
so it is crucial to make timely payments.