Outline of Japan Long-Term Care Insurance System-Company Formation_Trademark Registration_Tax Service - Hong Kong CPA

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Outline of Japan Long-Term Care Insurance System

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Outline of Japan Long-Term Care Insurance System

Along with the aging population in Japan, the demand for nursing care is increasing, mainly because of the growing needs of the elderly. On the other hand, the family model in Japan is changing from a traditional extended family (whole family living together) to a nuclear family (husband and wife with children living together), resulting in the lack of elderly care from family members, which leads to the problem of “lonely deaths” (die alone) of elderly. The welfare and medical care systems for the elderly, which traditionally have been used in Japan, can no longer fulfill the needs of today's society and cannot cope with the above-mentioned situations.

The Japanese government, therefore, has focused on the needs of elderly people in need of nursing care, and based on the concept of supporting the self-reliance of the elderly, it has been providing a wide range of insurance and medical services to the elderly through a social insurance model that is supported by the whole society. This led to the establishment of “Long-Term Care Insurance”, and the Long-Term Care Insurance Act was introduced bin 1997, and came into effect in 2000. Over the last 20 years, the numbers of people enrolled in the long-term care insurance have increased by about 160%, and the number of people receiving services through the system has increased by about 310%, which has effectively contributed to the solving various problems of care for the elderly.

However, the Japanese government does not appear to be optimistic regarding the future development of the health care insurance system. The aging society of Japan is not yet slowing down, and the decline in the ratio of the current workforce is making it difficult to maintain the current system. It has become a great challenge for the Japanese government to continue the system of elderly medical care and welfare while the number of workforces continues to be reduced.

In this passage, based on the information from the Japan Ministry of Health, Labour and Welfare, together with relevant laws and regulations, Kaizen will briefly introduce the long-term care insurance system in Japan, 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.

Long-Term Care Insurance

The long-term care insurance has been implemented since April 2000 and is operated by the municipal governments of each region. Thus, municipal governments are the insurers of the insurance. The insured persons of the long-term care insurance are those who have reached the age of 40 or older in Japan, while the insured persons who have reached the age of 65 or who suffers from “specified diseases” stated in the insurance are eligible to receive the services covered by the insurance system.

The above “specified diseases” include 16 categories, which are: Amyotrophic lateral sclerosis, cerebrovascular disease, ossification of posterior longitudinal ligament, progressive supranuclear palsy / cerebral cortico-basal ganglionic degeneration / Parkinson's disease, osteoporosis due to bone fracture, arteriosclerosis obliterans, multiple system atrophy, rheumatoid arthritis, Early stages of Alzheimer's disease, chronic obstructive pulmonary disease, spinocerebellar ataxia, spinal stenosis, diabetic peripheral neuropathy /diabetic kidney disease / diabetic retinopathy, significant joint deformity of knee joint or hip joint, Hutchinson-Gilford progeria syndrome, and terminal cancer.

Insured Persons

There are two types of insured persons in the long-term care insurance, “Primary Insured Person” who is 65 years of age or more and "Secondary Insured Person" who is 40 years of age or more but less than 65 years of age. Primary insured person is eligible for the services covered as long as he/she is in a status where he/she needs nursing care or assistance. Secondary insured person is eligible only after being recognized as suffering from a specific disease. The specific differences between the two types of insured persons are shown in the table below:

Item	Primary Insured Person	Secondary Insured Person
Target Population	People aged 65 or above	Participants Aged 40-64
Number of people	35,250,000	41,920,000
Eligibility for the benefits	While requires nursing care (having to stay in bed because of illness or injury or dementia etc.) or assistance (Inconvenience in daily life etc.）	While requires nursing care or assistance due to suffering from a specific disease
Ratio of beneficiaries to participants in the system	6,450,000 (18.3%)	130,000 (0.3%)
Premium Payment Methods	Collected by municipal governments from the pension	Collected by the health insurance provider together with the health insurance premiums

Insured Persons’ Contributions

When an insured person is eligible to receive benefits under the long-term care insurance and receives services, his/her contribution to the cost of the services will be 10%, 20% or 30% of the cost of the services.

Generally, the insured person will only contribute 10% of the cost, with the remaining 90% being covered by the insurer. However, 20% or 30% shall be paid for the following cases.

(1)	If the insured person's total income is 1.6 million yen or more, and his/her annuity income and other total income is 2.8 million yen or more (3.46 million yen for a married family), 20% of the cost of the nursing care should be contributed.
(2)	If the participant's total income is 2.2 million yen or more and his/her annuity income and other total income is 3.4 million yen or more (4.63 million yen for a married family), the participant will be responsible for 30% of the cost of the nursing care service.

Process of Using the Service under the Long-Term Care Insurance System

Eligible insured persons can go through the following process to receive nursing care services:

(1)	Insured persons in need of nursing care services or their family members consult with the municipal office and submit an application about the need for nursing care services.
(2)	The municipal government will send out staff to conduct an examination on the insured person and will determinate the degree of the necessity of nursing care according to the insured person's physical condition
(3)	After the determination, depending on the extent of needs, the upper limit on the amount of the monthly benefits will be calculated.
(4)	The insured person discusses with the staff and selects the nursing or assisted services he/she needs within the specified range.
(5)	Depending on the insured person's individual or family income, the insured person pays 10%, 20% or 30% of the cost of the service.

Degree of Necessity of Nursing Care

The municipal government determines the extent of need for nursing care (in Japanese, “要介護度”), according to the insured person's physical condition which is divided into seven levels as shown in the table below:

Degree of Necessity of Nursing Care		Insured Person's Physical Condition (Example)
Need Assistance	Level 1	Able to eat and defecate independently but require certain support to get up or stand up, as well as living activities such as bathing and housekeeping, which require certain care and assistance.
Need Assistance	Level 2	Able to eat and defecate independently, however, it is difficult to get up or walk, etc. require care and assistance in daily life.
Need Nursing Care	Level 1	On the basis of need assistance, level 2, requires nursing services to maintain and improve physical condition.
	Level 2	Able to dress and undress independently, but needs certain assistance in eating and defecating, needs support to get up, stand and walk, tends to forget things, has low comprehension of things, and needs a mild level of nursing care.
	Level 3	Requires a certain level of assistance in eating and defecation, basically unable to get up, stand and walk independently, requires full assistance in bathing, dressing and undressing, has low comprehension of things, and requires moderate level of nursing care.
	Level 4	Occasionally requires assistance in eating, full assistance in defecation, bathing, dressing and undressing, basically unable to get up independently and stand on both feet, with significantly poor comprehension of things, and requires significant nursing care.
	Level 5	Inability to eat and defecate independently, remarkable weaknesses in ability to perform activities of daily living, unable to walk and stand on both feet, difficult to deliver messages, and requires the highest level of nursing care.

Monthly Limit

There is an upper limit on the amount of benefits an eligible insured person can receive in a single month, which increases as degree of the necessity of nursing care. If an eligible insured person uses a nursing care service that costs more than the monthly limit, the insured person is responsible for the amount that exceeds the monthly limit. Based on the information provided by the Ministry of Health, Labour and Welfare as of January 2023, the following table shows the monthly limit for nursing care insurance:

Degree of Necessity of Nursing Care		Monthly Limit (Japan Yen)
Need Assistance	Level 1	50,320
Need Assistance	Level 2	105,310
Need Nursing Care	Level 1	167,650
	Level 2	197,050
	Level 3	270,480
	Level 4	309,380
	Level 5	362,170

Kaizen with experienced team of professionals, providing services of company formation, registration, and application for several types of permits/licenses and subsequent maintenance, tax planning and auditing services, please consult our consultants for more details.

Referenced from：

1. e-Gov 法令検索 - 電子計算機を使用して作成する国税関係帳簿書類の保存方法等の特例に関する法律

2. e-Gov 法令検索 - 電子計算機を使用して作成する国税関係帳簿書類の保存方法等の特例に関する法律施行規則

Disclaimer

All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.

If you wish to obtain more information or assistance, please visit the official website of Kaizen CPA Limited at www.kaizencpa.com or contact us through the following and talk to our professionals:
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Outline of Japan Long-Term Care Insurance System

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