Since the establishment of the Japan long-term care insurance in 2000, the monthly premium has increased from 2,911 yen in 2022 to 6,014 yen in 2022, and it is expected to increase to 8,165 yen in 2025. The trend of increasing long-term care insurance premiums over the past 10 years is beyond most people's expectations, and the sustainability of the long-term care insurance system in Japan is at serious risk.
According to the Japan Ministry of Health, Labour and Welfare, Japanese government has changed the direction of the reform of the long-term care insurance system from a national standardized system of care service allocation to a system operated by local municipalities, focusing on the formation of a geographically coordinated health care system. In addition, fairness in the premiums is also a major factor of the system's restructuring, which aims to expand reductions in premiums for low-income groups as well as to increase the proportion of premiums payable by higher-income groups. As of 2020, the average monthly premium is currently lower than 6,771 yen, which was previously forecasted, and the reform has begun to bring some results.
In this passage, referring to the information from the Japan Ministry of Health, Labour and Welfare, Kaizen will briefly introduce the premium of the long-term care insurance for the reference to current and potential clients. In addition, Kaizen do provide services on
Japanese social insurance service and payroll service, please contact our consultants for further information.
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Outline of Long-Term Care Insurance Premium
Long-term care insurance is a public social insurance system that covers the cost of services for elderly people in need of nursing care/assistance services. Different from the health insurance, long-term care insurance is limited to individuals aged 40 years or older. In Japan, individuals over the age of 40 are obligated to pay the premiums for long-term care insurance and are entitled to a maximum 90% waiver of the cost of nursing care/assistance services when certain conditions are met.
The long-term care insurance system is funded by 50% of the premiums paid by the participants, with 23% paid by the primary insured person (participants aged 65 or older; in Japanese, "第一号被保険者") and 27% paid by the secondary insured person (participants aged 40-64; in Japanese,"第二号被保険者"). The other 50% came from the national and local governments respectively.
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Amount of Long-Term Care Insurance Premium
The municipal governments throughout Japan act as insurers of the long-term care insurance and determine the base amounts and rates for the premium. In general, the amount of the premium depends on the type of insured person, his/her income, pension income, whether he/she pays resident's tax or not, or whether he/she has to pay medical insurance premiums, etc.
For example, for the fiscal years of 2021 to 2023, the long-term nursing care insurance premiums set by the Government of Minato Ward, Tokyo, is 74,940 yen a year, which applies to the primary insured person who is not subject to residential tax but whose family members are subjected to, with the total amount of his/her income and pension income exceeding 800,000 yen. For an insured person whose aggregate income and pension income does not exceed 800,000 yen, and whose family members are not subject to residential tax, the annual premium is 18,735 yen (25% of the premium).
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Payment Period of Long-Term Care Insurance Premiums
In principle, the payment period for the long-term nursing care insurance premiums starts from the day before a person reaches the age of 40 to the day of his/her death. For corporate employees and civil servants in Japan, the premiums are levied as part of the health insurance premiums between the ages of 40 and 64 and directly levied as long-term nursing care insurance premiums after the age of 65. The premiums are typically charged from the following month, i.e., the premiums paid in the current month are the amount of the previous month's premiums.
Notably, in the social insurance system, given the fact that the increase in age occurs on the day before the insured's birthday, an insured person whose birthday falls on the first day of the month and reaches the age of 40 should pay the premiums for the long-term care insurance from the month of the date of his/her birth.
For example, an insured person born on 1st October. His/her obligation to pay the long-term care insurance premiums occurs on 30th September of the year when he/she reaches the age of 40, and premiums should be paid in October for the September amount; however, an insured person born on 2nd October. His/her obligation to pay the long-term care insurance premiums occurs on 1st October of the year when he/she reaches the age of 40, and he/she does not need to pay the premiums for the September amount in October.
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Payment Methods for Long-Term Care Insurance
The primary insured person and secondary insured person are subject to a different method of payment of premiums as described below:
(1)
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Payment Period for Primary Insured Person (Participants aged 65 or older)
Primary insured person is subject to a special levy and a general levy.
A “special levy” is a method of collecting the premiums for long-term care insurance applies to the primary insured person who receives a public pension of 180,000 yen or more in a year. When the insured person meets the conditions for the special levy reaches the age of 65, he/she will receive a notice regarding the special levy from his/her local municipal government, and usually no other procedures are required.
If an insured person does not meet the conditions for the special levy, i.e., if he/she does not receive more than 180,000 yen in total from public pension in a year, he/she should bring along a payment slip (in Japanese, “納付書”) and visit a financial institution, post office, convenience store, etc., or by remittance through a bank, to pay the long-term care insurance premiums. This payment method is called general collection.
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(2)
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Payment Period for Secondary Insured Person (Participants aged 40 to 64)
The method of payment for secondary insured person depends on whether he/she is an employee of a company, a civil servant, or a self-employed person.
The long-term care insurance premiums for company employees or civil servants will be levied as part of the health insurance premiums and will be withheld monthly from their salaries, with the insured person and his/her employer contributing 50% of the premium respectively; and for self-employed persons or freelancers, etc. the premiums should be paid together with the national health insurance premiums, which are usually included in the national health insurance premiums.
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Late Payment of Long-Term Care Insurance Premiums
Normally, long-term care insurance premiums are levied from the income of insured persons, such as salaries, public pensions, etc., or are included in other social insurance premiums, therefore, it is rare for insured persons to forget to pay the premiums. However, the primary insured person who applies the general levy method may forget to pay the premiums.
When there is a late payment case, the insurer (municipal government) may impose penalties on the insured person based on the late payment period, and may even deprive the insured person's right to receive the full range of nursing care/assistance services. When the insurer discovers a late payment case, it may send a written notice such as a letter of reminder or send a staff member to visit the insured person to check on the situation.
The maximum period of late payment is 2 years, and the negative impact of late payment within 2 years can be eliminated to a certain extent by making up the late payment and paying the late payment. If the period of late payment exceeds 2 years, it will be recorded as “failure to pay”, and premiums delayed for more than 2 years will not be able to be settled in the future, which will cause a significant impact on the insured person's long-term care insurance benefits.
The penalty for late payment varies slightly between municipalities, please refer to the specific regulations of each municipality. Below is a list of common penalties for reference only.
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Period of Overdue
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Penalties
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Overdue for less than 1 year
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Additional late payment charge
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Overdue for over 1 year
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The insurer will no longer pre-pay
the cost of nursing care services, instead the insurer will reimburse 70-90%
of the full amount after the insured person pays the full amount.
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Overdue for over 1 and a half year
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The insured person pays 100% for the
nursing care services, and when the insured person submits reimbursement
request to the insurer, the insurer will deduct the outstanding premiums
amount before reimbursing to the insured person.
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Overdue for over 2 years
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The insured
person loses the rights to pay the overdue premiums, and his/her deductible
of the cost of nursing care services will be increased reaching 30% to 40%,
making the “high cost of nursing care services” unable to be reimbursed as
used to be.
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Reduction of Long-Term Care Insurance Premiums
Paying long-term care insurance premiums is a legal obligation for all people over 40 years of age in Japan. In principle, there are no exemptions from paying the premiums, in accordance with the law, even an unemployed person should pay the premiums. However, low-income individuals who are subsidized by the government or who have suffered serious financial losses due to disasters such as fires or floods may be eligible for a reduction in the amount of long-term care insurance premiums by communicating with the municipal government.
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