Japan Social Insurance Guide: Health Insurance, Pension, and Labor Insurance for Founders (2025 Update)

When you start a business in Japan, incorporation, visas, and taxes are only part of the picture. There is another major hurdle you cannot avoid: social insurance (社会保険, shakai hoken).

Many founders only realize how complex it is after they obtain a Business Manager Visa and complete company incorporation. There are multiple systems, the cost is significant, the procedures are administrative, and your compliance status directly affects both visa renewal and permanent residency applications.

This guide explains the full picture in one place: what kinds of social insurance exist in Japan, how much founders usually pay, and what business owners need to watch out for.

The Big Picture: Which Insurance Systems Founders Must Join

In Japan, “social insurance” in the broad sense is divided into two main categories:

Category	Included programs	When it applies
Social insurance (narrow sense)	Health Insurance + Employees’ Pension Insurance	Mandatory for corporations
Labor insurance	Workers’ Accident Compensation Insurance + Employment Insurance	Mandatory once you hire employees

If You Have a Corporation, Enrollment Is Mandatory

This is one of the points founders misunderstand most often: if you establish a corporation (Kabushiki Kaisha or Godo Kaisha), you must enroll in social insurance: Health Insurance and Employees’ Pension Insurance.

Even if you are a one-person company, as long as the corporation exists and you receive executive compensation (yakuin hoshu, 役員報酬), the company is treated as a compulsory covered business establishment (強制適用事業所).

✅ One-person KK, president’s monthly compensation is ¥200,000 -> must enroll
✅ GK with only one representative member -> must enroll
❌ Sole proprietorship with four or fewer employees -> not mandatory (voluntary enrollment may be possible)

What happens if you do not enroll? The pension office can issue corrective demands, and in serious cases can retroactively collect unpaid premiums for up to two years plus late charges. More importantly, Immigration checks social insurance compliance when reviewing Business Manager Visa renewals. In practice, failing to enroll can be close to a guaranteed refusal.

Labor Insurance Starts the Moment You Hire Someone

If you are still a one-person company, labor insurance does not usually apply yet. But the moment you hire even one employee including a qualifying part-time worker, you must join both workers’ compensation insurance and employment insurance.

An easy way to remember it:

Incorporate a company -> Social insurance (Health Insurance + Employees’ Pension) Hire employees -> Labor insurance (Workers’ Compensation + Employment Insurance)

Health Insurance Explained

Health insurance is the core of Japan’s medical coverage system. As the owner of a corporation, you normally join the employee insurance system rather than the National Health Insurance system used by sole proprietors and others.

Kyokai Kenpo vs. National Health Insurance

Item	Kyokai Kenpo (協会けんぽ)	National Health Insurance (`Kokumin Kenko Hoken`, 国保)
Who joins	Corporate directors and employees	Sole proprietors, unemployed residents, etc.
Insurer	Japan Health Insurance Association	Municipal governments
How rates are set	By prefecture under a national framework	Calculated independently by each municipality
Employer/employee split	✅ Yes, 50/50	❌ No, fully self-paid
Dependents	✅ Spouse and children can join at no extra premium	❌ Premiums are charged per insured person
Sick leave allowance	✅ Available	❌ Usually not available

Most SMEs and startups join Kyokai Kenpo. Some industries also have their own health insurance societies (kenpo kumiai, 健康保険組合), such as the Kanto IT Software Health Insurance Society, which may offer lower premiums or better benefits, but eligibility is limited.

Premium Rate (Tokyo, 2025)

Kyokai Kenpo premium rates vary by prefecture. In Tokyo for FY2025, the approximate rates are:

Health insurance premium: about 9.98% (about 11.58% if nursing care insurance is included)
Split equally between the company and the insured person, so each side pays about 5%

💡 Insured persons aged 40 or older must also pay nursing care insurance premiums (kaigo hokenryo, 介護保険料) of about 1.6%, also split equally between employer and employee.

The premium is calculated using the standard monthly remuneration (hyojun hoshu getsugaku, 標準報酬月額) table, not your exact salary amount. Japan Pension Service publishes this table each year, dividing monthly pay into 50 grades, from Grade 1 at ¥58,000 to Grade 50 at ¥1,390,000.

Example: Monthly salary of ¥300,000 -> standard monthly remuneration of ¥300,000 -> health insurance premium of about ¥29,940 per month in total, with about ¥14,970 paid by the individual.

Dependents: Family Members Can Join at No Extra Premium

This is one of the biggest advantages of Kyokai Kenpo over National Health Insurance. Your spouse and children can usually join your health insurance as dependents (hifuyosha, 被扶養者) without any additional premium, as long as they meet the conditions below:

Annual income is under ¥1.3 million (under ¥1.8 million for people age 60+ or with certain disabilities)
They mainly rely on the insured person’s income for living expenses
They are relatives within the third degree of kinship, such as a spouse, child, or parent

For founders bringing family members to Japan, this can mean almost no extra medical insurance cost for a spouse and children. For more on dependent-family status, see the Dependent Visa guide.

Benefits: What You Actually Receive

1. 30% out-of-pocket medical costs

When you visit a hospital or clinic, you generally pay only 30% of the medical bill yourself (20% for children below elementary-school age, 20% for ages 70-74, and 10% for age 75+). The remaining 70% is covered by insurance.

2. High-Cost Medical Expense Benefit (kogaku ryoyohi, 高額療養費)

If your medical expenses in a single month exceed a certain ceiling, the amount above that ceiling is reimbursed. For someone with a standard monthly remuneration in the ¥280,000-¥500,000 range, the limit is approximately ¥80,100 + 1% of the amount exceeding ¥267,000.

That means even if hospitalization and surgery cost ¥1 million, your actual out-of-pocket expense may still be only around ¥80,000-¥90,000. This is one of the strongest safety-net features of Japan’s health insurance system.

3. Injury and Sickness Allowance (shobyo teatekin, 傷病手当金)

If you cannot work for four consecutive days or more due to illness or injury, you can receive two-thirds of your standard daily remuneration from the fourth day onward for up to 1 year and 6 months.

⚠️ Important: In principle, a representative director or company president is not eligible for the injury and sickness allowance. The legal logic is that a company representative still carries management responsibility even while sick. In small-company cases where the person is genuinely unable to work, there can be exceptions in practice, but this is nuanced and is best discussed with a social insurance and labor consultant (shakai hoken romushi, 社会保険労務士).

4. Childbirth-related benefits

Lump-Sum Childbirth and Childcare Allowance (shussan ikuji ichijikin, 出産育児一時金): about ¥500,000 per birth (raised from ¥420,000 to ¥500,000 in April 2023)
Maternity Allowance (shussan teatekin, 出産手当金): two-thirds of standard daily remuneration for 42 days before childbirth plus 56 days after childbirth

Employees’ Pension Explained

Employees’ Pension Insurance (Kosei Nenkin Hoken, 厚生年金保険) is the “second floor” of Japan’s public pension system. Everyone enrolled in Employees’ Pension is also automatically covered by the National Pension (Kokumin Nenkin, 国民年金), the “first floor,” so retirement benefits come from both layers together.

Premium Rate

Employees’ Pension premium rate: 18.3% (fixed since September 2017)
Split equally between employer and employee, so each side pays 9.15%

This is also calculated based on the standard monthly remuneration table. The upper limit is the ¥650,000 grade, meaning salaries of ¥635,000 and above are treated as ¥650,000 for this purpose.

Example: Monthly salary of ¥300,000 -> Employees’ Pension premium of about ¥54,900 per month in total, with about ¥27,450 paid by the individual.

Category 1, 2, and 3 Insured Persons

Japan’s public pension system classifies all residents aged 20-59 into three categories:

Category	Who it covers	How contributions work
Category 1 insured persons	Sole proprietors, freelancers, students, etc.	Pay National Pension themselves (about ¥16,980 per month)
Category 2 insured persons	Company employees, civil servants, corporate directors	National Pension is already included within Employees’ Pension contributions
Category 3 insured persons	Dependents spouses of Category 2 insured persons with income under ¥1.3 million	No contribution required; automatically covered by the National Pension

As a corporate founder or company president, you are a Category 2 insured person. If your spouse earns less than ¥1.3 million annually, they automatically become Category 3 and do not need to pay pension contributions, while still building National Pension entitlement for the future.

How Much Will You Receive Later?

Your future pension depends on your contribution period and remuneration level. Roughly speaking:

Old-Age Basic Pension (Rorei Kiso Nenkin, 老齢基礎年金): about ¥816,000 per year with a full 40-year contribution record (FY2025 full amount)
Old-Age Employees’ Pension (Rorei Kosei Nenkin, 老齢厚生年金): calculated based on your average standard monthly remuneration and the number of contribution months

A rough formula is: annual Employees’ Pension benefit ≈ average standard monthly remuneration x 5.481/1000 x number of covered months

Example: average monthly salary of ¥300,000 and 20 years of coverage (240 months) -> about ¥394,632 per year -> plus about ¥816,000 in Basic Pension -> total around ¥1.21 million per year (about ¥100,000 per month).

Frankly, pension alone is usually not enough to live on comfortably. But it is still foundational protection, and Employees’ Pension offers a much better return than National Pension alone because the company pays half.

If you are a Chinese national, this point is especially important.

Japan and China formally brought their social security agreement (Nicchu Shakai Hosho Kyotei, 日中社会保障協定) into force on September 1, 2019. The key points are:

Avoiding double coverage: if you work in Japan and join the Japanese pension system, you can be exempted from China’s pension insurance contributions for the same period, and vice versa
Special rule for temporary assignments: if you are sent from China to work in Japan for an expected period of five years or less, you may stay only in China’s pension system and be exempt from Japan’s Employees’ Pension
⚠️ No totalization of periods: unlike some agreements Japan has with countries such as the United States or the United Kingdom, the Japan-China agreement does not currently totalize pension coverage periods. In other words, if you pay into the Japanese system for fewer than 10 years, you will not qualify to receive a Japanese pension

For Chinese entrepreneurs establishing a company in Japan: if you form a Japanese corporation and receive executive compensation, you are treated in principle as working in Japan and must enroll in Japan’s Employees’ Pension. At the same time, you may apply for exemption from China’s pension contributions.

Labor Insurance: What You Need to Know Once You Hire Staff

Once your company starts employing people, labor insurance becomes relevant.

Workers’ Compensation Insurance (`Rousai Hoken`, 労災保険 / 労働者災害補償保険)

Purpose: covers employees for injuries, illness, disability, or death caused by work or commuting.

Key points:

100% paid by the employer; employees do not contribute
Premium rates vary by industry, from 2.5/1000 to 88/1000. Standard office work is about 3/1000 (0.3%)
Coverage is broad: workplace accidents, commuting accidents, and occupational disease
No medical co-pay when workers’ compensation applies; unlike health insurance, there is no 30% patient share
Leave compensation is about 80% of wages (60% ordinary leave compensation benefit + 20% special allowance)

Employment Insurance (`Koyo Hoken`, 雇用保険)

Purpose: provides unemployment benefits and certain in-employment benefits such as childcare leave benefits.

Key points:

Paid by both employer and employee
FY2025 rate for general businesses: 15.5/1000 (1.55%)
- Employee portion: 6/1000 (0.6%)
- Employer portion: 9.5/1000 (0.95%)
Enrollment condition: scheduled to work 20 hours or more per week and expected employment of at least 31 days
Benefits include unemployment allowance (kihon teate, 基本手当), childcare leave benefits, family care leave benefits, and education/training benefits

Can a Business Owner Join Labor Insurance?

In principle, no.

Workers’ compensation: a corporate representative or director is not considered a “worker” and cannot join ordinary workers’ compensation. However, coverage may be available through the special enrollment system (tokubetsu kanyu, 特別加入) for small and medium-sized business owners, usually via a labor insurance association
Employment insurance: a representative director of a corporation cannot join at all. A dual-status executive (kenmu yakuin, 兼務役員) who also performs genuine employee-type work may qualify under certain conditions

If you are still a one-person company at the startup stage, labor insurance may not affect you yet. But once you hire your first employee, you must generally complete enrollment procedures with the Labor Standards Inspection Office and Hello Work within 10 days from the hiring date.

This is the part founders care about most, so let’s run the numbers.

If Monthly Salary Is ¥300,000

Using Tokyo rates, Kyokai Kenpo, and assuming the person is under age 40:

Insurance type	Rate	Monthly amount (total employer + employee)	Employer share	Employee share
Health insurance	9.98%	¥29,940	¥14,970	¥14,970
Employees’ Pension	18.3%	¥54,900	¥27,450	¥27,450
Subtotal	28.28%	¥84,840	¥42,420	¥42,420

If you have employees, you also need to add:

Insurance type	Rate	Employer share
Workers’ compensation	0.3% (office work)	¥900
Employment insurance (employer portion)	0.95%	¥2,850

For an employee with a monthly salary of ¥300,000, the company’s actual labor cost is about ¥346,170 per month including the employer’s social insurance burden of roughly ¥46,170.

If Monthly Salary Is ¥500,000

Insurance type	Monthly amount (total employer + employee)	Employer share	Employee share
Health insurance	¥49,900	¥24,950	¥24,950
Employees’ Pension	¥91,500	¥45,750	¥45,750
Subtotal	¥141,400	¥70,700	¥70,700

At a monthly salary of ¥500,000, social insurance costs are close to ¥140,000 per month, with the company and the individual each bearing about ¥70,000.

The Hidden Cost for Founders

This is a key point many founders miss: if you are a one-person company president, the “employer share” and the “employee share” are both ultimately your money.

If you set your own monthly compensation at ¥300,000:

Employee share (withheld from salary): about ¥42,420
Employer share (paid from the company account): about ¥42,420
Total real social insurance cost: about ¥84,840 per month, or roughly ¥1.02 million per year

That is before income tax and resident tax. A company president with monthly compensation of ¥300,000 may end up taking home only a little over ¥200,000.

When planning your startup budget and tax structure, you need to include social insurance costs. Many people budget for office rent and their own salary but forget that the company must also pay another almost-equal amount on top.

For founders holding a Business Manager Visa, social insurance is not just a legal obligation. It directly affects whether you can continue living in Japan.

Since around 2020, Immigration has explicitly required social insurance documents in Business Manager Visa renewal reviews, including:

Copies of health insurance and Employees’ Pension premium receipts
A social insurance payment certificate or payment confirmation certificate

If your company is incorporated but has not enrolled in social insurance, Immigration may require a written explanation at renewal, and in serious cases it can directly affect the result. For a fuller document checklist, see the Business Manager Visa renewal guide.

Permanent Residency: A Near-Perfect Record Is Expected

Permanent residency applications are reviewed even more strictly:

In principle, pension and health insurance must have been properly paid throughout the relevant period before the application
No late payments are allowed; even if you later catch up, a record of delinquency can still count against you
You may need to submit your pension statement or insured-person record response to prove your payment history

Since the tightening of permanent residency screening in 2019, social insurance payment history has become one of the most important review factors. For more detail, see the Business Manager Visa to permanent residency guide.

Consequences of Not Enrolling

Consequence	Details
Corrective notice and retroactive collection by the pension office	Up to 2 years retroactive, plus late charges of roughly 8-14% annually
Difficulty renewing your visa	Immigration may view this as failure to comply with Japanese law
Permanent residency denial	Unpaid social insurance is one of the most common refusal reasons
Employee dispute risk	Employees may file labor claims if they discover the company failed to enroll
Administrative penalties	Under the Health Insurance Act and Employees’ Pension Insurance Act, violations can lead to up to 6 months’ imprisonment or a fine of up to ¥500,000

In one sentence: when you run a business in Japan, social insurance is not optional.

FAQ

Yes. If the business is a corporation (KK or GK), it is a compulsory covered business establishment even if there is only one company president, so Health Insurance and Employees’ Pension enrollment is mandatory. The only practical exception is when executive compensation is set at zero. In that case there is no standard monthly remuneration to base enrollment on. But note that setting executive compensation at zero can create separate tax and visa problems.

Executive compensation directly determines your social insurance cost. The higher the monthly amount, the higher the premiums, though there are caps. Many founders try to balance company profit, personal income tax, and social insurance cost. This is a tax-planning issue and is best discussed with both a tax accountant and a social insurance and labor consultant.

Q3: Does a sole proprietor need to join Employees’ Pension?

No. A sole proprietor in a non-mandatory sector with fewer than five employees joins National Pension and National Health Insurance, not Employees’ Pension or Kyokai Kenpo. But once you convert the business into a corporation, you must switch into the Employees’ Pension plus employee health insurance system.

Q4: If my spouse is living in China, can they still join my health insurance as a dependent?

In principle, since April 2020, dependents must satisfy a residency requirement in Japan. That means a spouse living in China ordinarily cannot be added as a dependent under your Japanese health insurance. There are exceptions, such as overseas study or accompanying an overseas assignment, where special recognition may be possible. You should confirm the specific case with the pension office.

Yes. Social insurance premiums are fully deductible for income tax purposes. The portion you pay personally can be deducted in full from taxable income, and the employer portion is booked by the company as a statutory welfare expense. So although social insurance is expensive, it does reduce tax. For more on this, see the Japan entrepreneur tax guide.

Q6: Where do I apply, and what documents are needed?

Health Insurance and Employees’ Pension: file the New Application for Health Insurance / Employees' Pension Coverage with the competent pension office, together with documents such as the corporate registry certificate
Workers’ compensation: file the Notification of Establishment of Insurance Relationship with the competent Labor Standards Inspection Office
Employment insurance: file the Application for Establishment of Employment Insurance Coverage for the Business with the competent Hello Work office

As a rule of thumb, social insurance procedures should be filed within 5 days after incorporation, and labor insurance procedures within 10 days after hiring employees. Online filing through e-Gov is also available.

Q7: I am already paying pension insurance in China. Do I still need to pay Japan’s Employees’ Pension?

Under the Japan-China social security agreement, if you are temporarily assigned from a Chinese company to Japan for five years or less, you may be exempt from Japan’s Employees’ Pension and continue contributing only in China. But if you set up and operate your own corporation in Japan, that is treated as local employment in Japan, so Employees’ Pension is generally mandatory. At the same time, you may be able to apply to the Chinese authorities for exemption from China’s pension contributions.

Q8: When are premiums due each month, and how are they paid?

Social insurance premiums are due by the last day of the following month. For example, premiums for April must be paid by May 31. Payment methods include automatic bank transfer, payment slips at banks or convenience stores, and electronic payment. Automatic debit is the safest choice if you want to avoid late payment by mistake.

Q9: Do employees need to be enrolled during their probation period?

Yes. Japanese law does not recognize a “probation period exemption” from social insurance. Once the employment relationship begins, enrollment in applicable social insurance and labor insurance starts from day one. Even if the employment contract says “three-month probation,” insurance coverage still begins on the first day.

Q10: If I leave Japan, can I get back the Employees’ Pension contributions I paid?

You may be able to claim a Lump-sum Withdrawal Payment (dattai ichijikin, 脱退一時金) if:

You do not hold Japanese nationality
You no longer have an address in Japan and have filed the move-out notification
You were enrolled in Employees’ Pension for at least 6 months
You do not meet the pension eligibility requirement because your coverage period is under 10 years
You apply within 2 years after leaving Japan

The refund amount is broadly calculated as: average standard remuneration x payment rate based on the number of months covered, subject to a cap corresponding to 60 months (5 years) of contributions. Note that this does not return everything you paid. It only refunds part of the insured person’s contribution side, not the full amount. Also, once the lump-sum withdrawal is paid, the related pension coverage period is erased from your Japanese pension record.

Final Thoughts

Japan’s social insurance system is complicated, but it is also robust. As a founder, one reality you need to accept is this: social insurance is one of your largest expenses, second only to payroll, and arguably part of payroll itself.

From another angle, however, this system is what gives you and your family access to:

World-class medical coverage (30% co-pay plus the high-cost medical expense system)
Free dependent enrollment for a spouse and children under health insurance
Future pension protection
A strong compliance record for visa renewal and permanent residency

It is wise to work with a reliable social insurance and labor consultant (shakai hoken romushi, 社会保険労務士) early in the life of your company. Social insurance is not something you can treat as a box-ticking exercise. Executive compensation design, dependent qualification, and your long-term pension strategy all deserve proper planning.

📌 This article is based on the FY2025 system framework. Premium rates and implementation details can change from year to year. For specific procedures, rely on the latest official guidance from the pension office, Kyokai Kenpo, and other relevant authorities, or consult a qualified social insurance and labor consultant.

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