Beware of your insurance fees in Japan

When you are employed full-time in Japan the fees for health insurance, pension and unemployment insurance are split between employee and employer. But how is the amount you pay determined?

You might think it is a percentage of your salary but actually, it is a fixed amount that is determined in a very weird way.

The amount is determined by the average of your salary from April to June - this includes overtime and transportation fees. The average is then compared with this table (The PDF linked only applies for Tokyo.) and depending on which category you end up falling in you pay a fixed fee.

The insurance fees are always calculated in September and then you will pay a fixed amount for one year until it is again calculated in September of the next year.

Even if your average salary is only slightly above the threshold for a higher category, you still end up in the higher category. This can lead to very inconvenient situations for employees.

For example, if April, May and June are very busy months and you do more overtime than usual you will be paying insurance fees based on these months' salaries even if you make less during all the other months. A lot of companies also give salary raises in April which means that these will impact the insurance fees for the employee immediately. I once had a colleague that received a raise, but this raise pushed them into a higher insurance category so, in the end, they had less money than before the raise.

If you have some control about when to do overtime it would be best to avoid overtime in the months of April, May, and June in order to keep your insurance fees lower.

I find this system rather unfair. This year I did slightly more overtime in April than last year which pushed my average salary into the higher category because it was 300 yen above the threshold. Now I pay about 2,500 yen more each month even though during most months my salary is below the threshold.

How does that make sense? Why do they not take the average of the whole year? Why only three months and why these three months in particular?

If you look up Japanese websites about this topic, they tell you that this money is not lost, but do they really believe that? I receive the same health services no matter how much I pay so paying less is obviously better. The pension you receive is indeed dependent upon how much you paid but I do not think I will receive any pension when I am old anyway.