Enrollment in Japan's health insurance program tied to visa renewal from 2010
In your wallet or somewhere at home, do you have a blue or pink card showing that you are enrolled in one of Japan's national health and pension programs? If not, and if you are thinking of extending your stay here, you may want to think about a recent revision to visa requirements for foreign residents. The changes, which the Justice Ministry says were made in order to "smooth out the administrative process," may have major consequences for foreign residents and their future in Japan.

On a drab, rainy Sunday in June, a group of foreign workers gathered at the office of the National Union of General Workers Tokyo Nambu in Shimbashi to discuss an equally drab topic: social insurance. According to a new immigration law passed by the Diet earlier this month, foreign residents will be required to show proof of enrollment in Japan's health insurance program in order to renew or apply for a visa after April 1, 2010.

Surrounded by giant protest signs, leaflets and a Che Guevara poster, a quiet anxiety hung in the room as participants listened to the seminar. A handful of attendees were young, but most were middle-aged or approaching retirement age. Many had been working in Japan for years and had never been told anything about insurance, while others were aware of the program but had been dissuaded by their employers from joining it.

Louis Carlet, deputy secretary of Nambu, laid it down for everyone in the room to understand. There are a few basic things that all foreigners in Japan have to know, he explained: first, that everyone over the age of 20 in Japan is required to enroll in an approved Japanese government health insurance scheme and pension fund. If you are under 75 and working at a company that employs more than five people, this most likely means the shakai hoken (social insurance) program; if you are unemployed, self-employed or retired, the equivalent system is the kokumin kenko hoken and kokumin nenkin (national health insurance and pension). The only people exempt are sailors, day laborers, and those working for companies employing less than five people, or for firms without a permanent address (e.g. a film set).

The two systems cover different ground, all of which is explained in detail at www.sia.go.jp/e/ehi.html. Roughly, shakai hoken consists of two parts: kenko hoken (health insurance), which covers 70 percent of your medical costs and 60 percent of lost wages due to illness, and kosei nenkin (pension insurance), which provides a pension after age 65 for those who have paid into the system. The two are inseparable, and anyone enrolled in shakai hoken through their employer automatically pays into both. The kokumin kenko hoken (national health insurance) and kokumin nenkin (national pension) package offers similar coverage but is not provided through an employer.

The bottom line is that all residents of Japan (except those mentioned above) have to be enrolled in one or other of the two systems. The revised visa laws, therefore, should pose no threat to anyone's visa renewal, because every foreigner in Japan should already be enrolled.

However, the reality is that most foreigners in Japan do not have either form of insurance. For example, a 2004 survey by Hiroshi Kojima of the National Institute of Population and Social Security Research found that only 28.3 percent of Japanese Brazilians in Iwata City, Shizuoka Pref., had any kind of health insurance, and that of these only a third were enrolled in shakai hoken. Another survey in 2009 found that just one out of 27 manufacturing companies had enrolled its foreign employees in workers' compensation, leaving thousands of foreigners ineligible for any form of assistance when the economic downturn hit Japan last year, leading to mass layoffs.

"I've been in Japan for the last 15 years, and nobody told me about these programs," said one attendee at the seminar, triggering a wave of nervous nods around the room. "What's going to happen to me? Can I get my past employers to pay up?"

When insurance becomes a requirement for visa renewal next year, those who are not currently enrolled may be obliged to pay for fees that should have been deducted from their salaries had they been properly enrolled by their companies. While the government can only bill employers and employees up to the past two years, it's a sizable sum of money that many people may not have readily available. Mercifully, local ward offices (kuyakusho) generally allow new enrollees to pay in installments, but their employers may not be so lucky if they are found to have knowingly broken the law by failing to enroll staff in national insurance.

If employers in Japan are obliged to register all employees in shakai hoken, why have so many foreigners been left out?

The chief reason is cost: Carlet explained that companies are required to cover at least 50 percent of their employees' pension and health insurance premiums, which works out to roughly a tenth of the monthly salary. That's about ¥30,000 monthly for every worker earning a salary of ¥250,000 — a huge sum of money that can threaten the very survival of a business.

"Billions of yen are at stake for the companies," stressed Carlet, noting that foreigners are often offered higher wages than their Japanese counterparts to make up for the fact that have to pay for their own private insurance.

Foreign workers often hear a litany of reasons why they should not be enrolled in shakai hoken, or are simply not told about it at all. Employers would have a much tougher time leaving their Japanese staff off the system, argues Carlet, as many associate shakai hoken with a certain social status — those left out of the system tend to be in insecure employment such as day labor and very short-term contract work. For many Japanese workers, nonenrollment implies that their company either doesn't value them as a long-term employee or simply doesn't have the funds to cover the cost of insurance.

Apart from the sizable dent it makes on the average paycheck, there are a number of reasons why shakai hoken can seem unappealing for foreigners. For starters there's the pension: Even though foreigners are required to pay into the system, they won't actually get the money back until they have paid in for at least 25 years. Those who don't spend a quarter of a century diligently paying pension fees in Japan can use a kara kikan (empty period) option that allows workers to count years spent working abroad, but only provided that they get permanent residency in Japan before turning 65.

The laws aren't so accommodating for those who choose to leave Japan permanently and want to claim their money back. As Masahito Azuma, a representative of the Social Insurance Agency (SIA), explains, there is "a lump sum known as dattai ichijikin (lump-sum withdrawal payment) that repays up to three years of contributions (¥249,480)."

But how about if you have contributed money into the pension scheme for more than 10 years? "The maximum (payout) is still three years." Azuma adds that you would also have to file your application within two years of leaving Japan.

As for health insurance, some foreign workers find little comfort in the fact that shakai hoken covers most of their medical costs, because some well-known English-speaking clinics don't accept Japanese insurance anyway. For example, at the Hiroo International Clinic based in Minami-Azabu, one of Tokyo's most diverse neighborhoods, patients can receive medical services in impeccable English, but none of the costs would be covered by Japanese insurance.

"You would have to pay the full cost upfront," explains Dr. Isao Tsutsumi, adding that his clinic doesn't accept Japanese insurance because it would oblige him to see Japanese patients and lead to reduced time for individual patients.

It's not clear why these changes are occurring now. When pressed for an explanation, a representative of the Ministry of Justice (who declined to give her name) replied that it was merely carrying out the Cabinet's three-year plan for regulatory reform.

"We're simply acting on the suggestions of the government and the Immigration Bureau," she said. "The new rule would help the bureau confirm the situation of those enrolled in social insurance, and also encourage the enrollment of those who haven't done so already."

Regardless of how people feel about the national health insurance system, the fact is that enrollment is mandatory for residents of Japan, and the new visa requirement merely draws attention to this.

Carlet finds it "bizarre" that some firms claim their foreign workers wanted to be left off the pension and insurance schemes; it's the law, he says, and employees can "opt out" of it no more than Warren Buffett can "opt out" of paying income tax.

Unfortunately, many companies get away with hiring foreigners without enrolling them in pension and insurance plans because the SIA tends not to crack down on employers with uninsured workers unless certain standards are violated. For example, companies legally have to enroll part-timers if they have been working for the firm more than two months, but the SIA doesn't necessarily investigate unless an employee is working three-quarters of the hours of a full-time employee (30 hours in most cases). Some language schools get around this by counting only the lesson hours of their employees (28 hours per week maximum) and ignoring their preparation time, while others like Gaba Corp. claim their instructors are subcontractors, who are not eligible for benefits, rather than actual employees.

It's a lot like driving on a road with an 80-kph limit: It's illegal to drive 85 kph, but police will only crack down on those going 90 and over, leading many employers to break the law with impunity.

When national health insurance becomes a visa condition in April, many companies will be forced to address these issues as some foreign employees decide to settle in Japan. Clyde Grimm, a curriculum supervisor at the Kanda Institute of Foreign Languages, explains that many foreigners come to work in Japan and end up committed to living in the country. "A lot of us weren't planning to stay for long," he shrugs. "But you meet someone, you get married, and you might end up spending your whole life in Japan."

Whether intended or not, one consequence of forcing non-Japanese residents to become fully paid-up members of society with access to Japan's social safety net may be that more foreigners feel they have a stake in staying on and making Japan their permanent home.

While it may result in administrative nightmares, the new visa requirements could lead to shifting dynamics between foreigners and their Japanese employers. No longer can these workers be viewed as shifty, temporary staff existing separately from their Japanese colleagues in a legal twilight zone of Japanese labor practices.