What happens if you don’t pay your National Health Insurance tax?

Introduced based on one of the guiding principles of Japanese social security system “Universal health insurance coverage”, all Japanese citizens, permanent residents and any non-Japanese residing in Japan must be enrolled in a public health insurance system. Unless you are an employee and enrolled in other public health insurance through your employer, you are required to join National Health Insurance (NHI). Once you become a member of NHI, you are responsible to pay insurance tax (premium). But sometimes annual NHI tax impose a great strain on some residents. It is so easy to be tempted to delay insurance tax payments, or even ignore payments in such a case. Actually, this is something you should never do. Neglecting NHI tax payments will cause a significant future trouble.

Basic knowledge about National Health Insurance

Entry conditions

As previously mentioned, all residents residing in Japan must be covered by a public health insurance. Employees of companies or other entities and public workers enroll in Employee’s Health Insurance or Mutual Aid Insurance, and residents who fall into the following categories enroll in NHI. As well as Japanese citizens, all non-Japanese residents residing in Japan on visa for 3months or longer must enroll in NHI, except for few cases.

Self-employed person, person engaged in agriculture or fisheries
Person who resigned from a job and lost a membership of a health insurance other than NHI
Casual or part time employees who are not enrolled in Employee’s Health Insurance

NHI tax is calculated based on annual income of the previous calendar year

Your NHI tax is calculated on the basis of your annual income in the previous calendar year that you filed at tax return. Once your tax return is filed in March, you will receive NHI tax payment slip for your household during April and May. Your annual NHI tax is to be paid in 10 installments from June to March following year.

So, what happens if you don’t pay NHI tax?

Once your NHI tax payment starts falling behind, a local office in your area start sending reminders to urge prompt payment. When they send first reminder differs by each municipal office. Normally, they take progressively severe actions as you neglect reminders from them.

1. Reminders from municipal office start coming in

When you delay National Health Insurance tax, you receive a reminder letter from a municipal office within a month from due date. The letter is to remind you of delay of insurance tax payment and notify a dead line to pay the balance. If you clear unpaid balance immediately after the first reminder, there will be no further actions taken to you. But if you make no action for it, a municipal office staff will contact you by telephone or visiting your house.

2. Validity of your health insurance card is shortened (6months delay or longer)

If your NHI tax payment is 6months behind or later, validity of your NHI card is shortened and you receive a short term insurance card. A short term NHI card can be used to receive 70% coverage at medical institutions as the same as an ordinary insurance card, but is valid only for a few months.

3. Certificate of the insured of NIS replaces your insurance card (1 year delay or longer)

When your NHI tax payment is 1year overdue or longer, a certificated of the insured of NHI will be issued to replace your short-term health insurance card. Unlike ordinary health insurance card, you cannot receive immediate 70% coverage of your medical cost by presenting this certificate. You are required to pay full amount of your medical cost at medical institutions. You still are qualified to claim benefit from NHI, though, it is more than likely that you are required to clear unpaid balance before your benefit is paid.

4. high-cost medical expense benefit payment stops (18 months delay or longer)

Once your NHI tax payment is 18months behind or longer, you no longer receive any benefit out of NHI. You are no longer entitled to claim 70% coverage of your general medical costs as well as high-cost medical expense benefit that reimburse your annual medical expense that exceeds a certain amount. That is, you have no coverage when you receive high-cost medical treatments such as hospitalization for illness or injury.

5. Seizure of your asset (More than 18months delay)

Any further delay more than 18moths will be subject to seizure of debtor’s assets. Your outstanding balance of NHI tax may be retrieved by locking your bank account, your salary or tangible assets. “Your debt” includes total sum of unpaid NHI tax and accumulated interests.

What you should do when you are in financial difficulty

Whether you like it or not, you are required to enroll in NHI as long as you reside in Japan for 3 months or longer. Amounts of insurance tax is income based but not cheap at all. It can really pressure your budget if you are currently in financial difficulty because NHI tax is calculated based on your income in the previous year. In case you are not able to pay NHI tax on time for any reason, visit your local municipal office to ask for advice instead of falling behind on your tax bill. You may be allowed to pay by reduced amount installment.

Be on time!

NHI tax is calculated from your annual income in the previous year. Therefore if you are currently earning extremely lower income comparing to the previous year, you are likely to experience difficulty to pay insurance tax. You may just choose to delay tax payment in such a case, but this is not very wise. If you are not able to pay NHI tax due to financial difficulty, don’t hesitate to visit your local municipal office for advice. Do not neglect inquiries or demand letters from a municipal office.