Japan introduced long-term care insurance in 2000 to pay for home help, day care and nursing homes for an ageing population. It is run by municipalities and financed half by taxes and half by premiums. Services are available mainly to people aged 65 and over who are assessed as needing care, and to those aged 40 to 64 with age-related conditions. Users pay 10% to 30% of the cost depending on income.
Premiums are collected in two ways. Employees aged 40 to 64 pay as part of their health insurance: the contribution starts from the month in which they turn 40 and stops when they turn 65. In the Japan Health Insurance Association the fiscal 2026 rate is 1.62% of standard monthly remuneration and bonuses, half from the employer; company health insurance societies set their own. People in the National Health Insurance pay a care portion in their premium. From 65, everyone pays a premium set by their municipality, usually deducted from their pension.
Foreign residents staying more than three months are covered on the same terms. An assignee exempt from Japanese health insurance under a totalisation agreement is outside the system, and so pays no care premium either.
What it means for a foreign employer
- Budget for the age step. Turning 40 adds about 0.8% of pay to employer cost in the national association, so a team's cost rises as it ages.
- The employee notices too. Net pay falls in the month someone turns 40, and a short note from HR avoids questions.
- It shapes caregiver leave. Public care services reduce, but do not remove, the load on employees caring for parents, which is why caregiver leave and flexible hours matter for mid-career and senior staff.
- Retirees on re-employment still pay. Staff re-employed past 65 leave the health-insurance route but continue to pay their municipality.
Sources
- Long-Term Care Insurance Act, Articles 9, 129 and 135; Health Insurance Act, Article 160.
- Japan Health Insurance Association, fiscal 2026 contribution rates.