Medical Insurance (Health Insurance) System after Retirement

[Tkydon]

I reiterate my previous note

You have three options.

1. Your Previous Provider
The amount of your Medical Insurance (Health Insurance) premiums depends on the level of your last year's total taxable Income, number of dependents, etc., up to an absolute annual maximum (Y500,000) (which then converts to a monthly payment).

For the year after your retirement, the medical insurance premium, whether your previous provider or Kokumin Kenkou Hoken, will be based on your final year's taxable income, and therefore will 'probably' be about the same whether you stick with your previous provider, or switch to Kokumin Kenkou Hoken, unless there are other changes in your circumstances. You can check the Kokumin Kenkou Hoken premium at the Ku-Shi-Son-Cho Yakusho.

Therefore, for the first year at least, your previous provider will probably be the better option, so you should probably elect to continue for a year...

2. Kokumin Kenkou Hoken,
In the second year, however, the premiums for Kokumin Kenkou Hoken based on your first year's retirement income may be significantly lower than your previous provider, which will still be priced based on your final year's income when you were still in employment.

At the end of the first year, your previous provider will notify you and give you the option to continue for a second year at the same premium, or check the premium for Kokumin Kenkou Hoken at your Ku-Shi-Son-Cho Yakusho, which would probably be much cheaper based on your retirement income level instead of your final employment income level. You may compare, and choose to continue or switch...

Therefore, for the second year onwards, you should probably switch to Kokumin Kenkou Hoken for a huge reduction in cost.

In any case, you will probably be forced to switch at the end of the second year...

[captainspoke]

Just a quick 'Thank You' once again for the information. I posted this over 2 years ago! Retirement is like a fast approaching tsunami
As I get nearer to the inevitable day, my post-retirement plans are as unstable as the weather here in Hokkaido. Post-covid, advances in AI. Maybe I should just have ChatGPT figure it all out for me

I was lucky to be able to watch a couple colleagues retire a year and two years before I did--was able to talk a little and see what surprises there were as it unfolded.

During my last year, I got the lists from both the library and 経理科/accounting for the things that I would need to turn back in, and did that several months or more before I left. Also, having been in the same office for the whole time, I checked with the facilities section to make sure what they expected to remain there, vs what to give away, trash, or bring home. It all worked out, but starting early made it much easier.

[jane doe]

Also know that you only have 20 days from your last day of work to sign up to continue on the employer's insurance. My company didn't even tell me about the existence of this insurance. Even so, I had been writing to them demanding they issue all my post-employment paperwork since the day after I stopped work. Anyway, they posted out the certificate I needed to re-enrol 21 days after my last day of work. The insurer said very sorry, but your employer's negligence was no reason to extend the application deadline, so I was locked out and forced to go onto Kokumin Kenko Hoken. In my case, it would have saved me 13,000 yen a month over Kokumin Kenko Hoken for me and my husband. And when I contacted the ex-employer to complain, they said 'your problem, your responsibility'.

Absolutely shocking, specially considering over 60% of their employees are foreign residents not fluent in Japanese. I considered myself fairly knowledgeable. You bet I'm p*ssed.

Agreed though, that you need to check whether it's worth swapping to Kokumin Kenko Hoken in the second year, unless your retirement income really puts you in clover.

[Tkydon]

Dear experts
Please help me understand what awaits me if/when I quit my job (and continue work temporarily as sole proprietor on a consultant contract).

Current Employer health insurance deduction is 58k yen.
If I retire, does that mean I have to pay double that (employee plus employer portion), plus pay insurance for my spouse as well?

No, the premiums will change between when you're still in employment and when you are retired / working part time. You will only pay the Household Premium, and not the employer portion.

It depends when in the year you retire. For the first year out of employment, the premiums will be calculated based on your final year's employment income. There is a cap for a year set at about Y500,000 per household. Your current provider's plan will probably be payable over 12 months, whilst the Kokumin Kenkou Hoken is payable over 10 months, with no payments in April and May.

The monthly premium for your current provider's plan will probably be fixed for two years.
You will probably find that your current provider is cheaper than Kokumin Kenkou Hoken for the first year, but the contributions will continue at the same level for the second year, and so Kokumin Kenkou Hoken should become the cheaper option for the second year. You can switch at any time.

The premiums include the Health Insurance and Nursing Insurance.

See details and calculators here:

https://www.city.shibuya.tokyo.jp.e.mu. ... yo_26.html

http://www.city.nagasaki.lg.jp.e.jc.hp. ... rance.html

Nenkin is 59k, this should become less for Kokumin nenkin like 16k/month and I can supplement with Ideco 68k/month if I choose to, I guess.

Yes, you are currently paying the National Basic Pension - Kokumi Kihon Nenkin, and either National Employees' Pension Insurance - Kosei Nenkin, or another Pension Plan. Therefore, your current additional allowance for Tax Advantaged Retirement Saving in iDECO would probably be Y12,000 (or maybe Y23,000) per month...

The National Basic Pension - Kokumi Kihon Nenkin Mothly Contribution is currently Y16,520 per month.

After leaving employment, you will have full access to the full allowance for Tax Advantaged Retirement Saving in iDECO at Y68,000 per month...
That is equivalent to Y816,000 per year.
If you have income tax to offset, then this would be the preferred option, as you will get a tax rebate / deduction equal to your marginal rate of national income tax + 10% Residents' Taxes of that amount.The payout from iDECO will be taxed on distribution.
However, if you do not have taxable income, you do not gain any benefit from continuing to pay into iDECO, and so NISA would probably be the better option. You don't get any tax benefit on the way in (but you may not for iDECO either if you have no income tax to offset...), but the gains are completely Tax Free on the way out...
The allowance for this year (2023) is Y1.2M for NISA, OR Y400,000 for Tsumitate NISA.
For 2024 onwards, the allowances will be Y2.4M for NISA, AND Y1.2M for Tsumitate NISA. Total Y3.6M per year to a maximum lifetime contribution limit of Y18M.

Or both, if you can afford it.


Be aware that you will also have the Residents' Taxes to pay into retirement on the final year's employment income.
Residents' Taxes for 2022 Income are payable from July 2023 to June 2024. (The last full year ???)
If you are still employed, you are paying them in monthly installments out of payroll from July 2023 to June 2024.
If you leave employment in 2023, you will still have to pay them, and they will send you payment slips, payable in one lump sum or quarterly in 3 month installments payable at the end of July 2023, October 2023, January 2024 and April 2024. Total 10% of 2022 Taxable Income.
You will then have to pay Residents' Taxes for this year's (2023) income, and they will send you payment slips, payable in one lump sum or quarterly in 3 month blocks payable at the end of July 2024, October 2024, January 2025 and April 2025. (Maybe more than half, or nearly the full amount of 2022, depending on when you stop working ???). Total 10% of 2023 Taxable Income.
2024 Residents' Taxes on your income in retirement will then be payable in 2025/6, and so on. (Probably the first major reduction). Total 10% of 2024 Taxable Income.
and so on...
So your Residents' Taxes will probably continue at the current monthly deduction multiplied by 3, payable every 3 months until April 2025...

If you own a property, you will still have t pay the Fixed Asset Tax - Kotei Shisan Zei, quarterly.


On the bright side, you may get a Lump Sum Payout from your employer for a workplace pension. If so, that lump-sum is taxable outside the normal annual income tax system, so the tax rate is very advantageous, depending on lump sum amount and number of years employed.
From the lump sum, the only deduction is the Special Deduction of Y400,000 per year for the first 20 years, and then Y700,000 per year for any years over 20 years. You then halve the remainder to get the Taxable Amount, and apply the marginal tax rates to that Taxable Amount, so very low tax.

Depending on your age, you may be able to start withdrawing the Japanese National Pension.
You can actually take a reduced payment from age 60, at 70% (100-30%) of the payment at 65. That percentage goes up for each month you wait, to reach 100% of the payment at age 65, and keeps rising further if you defer further to a maximum at 75 years of age of 184%.
You can see the Discount Factor for every starting month before 65 (100 - given %) in this table:

https://www.nenkin.go.jp/service/jukyu/ ... 21-01.html

or the Multiplier Factor for every month after 65 (100 + given %) in this table:

https://www.nenkin.go.jp/service/jukyu/ ... 21-02.html


If you are still under 65, you can use the time between 60 and 65 to keep paying in and increase the total number of months' contributions and the amount of the payout at 65, to a maximum of 480 months of contributions.

See:

Basic Pension Benefits - Kihon Nenkin:
https://www.nenkin.go.jp/international/ ... nsion.html

Benefits Section.
Old-age Basic Pension
Benefit Amount (Fiscal year 2023)


Employee Pension Insurance Benefits - Kousei Nenkin, if enrolled:
https://www.nenkin.go.jp/international/ ... loyee.html

See Sections:
Benefits
60-64
65~

If you log in to Nenkin-Net at
https://nenkin.go.jp
or if you go to the local Pension Office in your district, you can get a projection of the amount you will receive for the various pay-out options.