Health Insurance andHealth Insurance Societies
in Japan

CONTENTS
I . Health Insurance[1] Application[2] Financial Resources[3] Benefits

II. Health Insurance Societies[1] Organization and Functions[2] Undertakings

KEMPOREN
NATIONAL FEDER ATION OF HEALTH INSUR ANCE SOCIETIES

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I. Health Insurance
In Japan, all citizens are enrolled in the public medical care insurance system (universal coverage).
Japan’s public medical care insurance is broadly divided into two entities: employees’ insurance
directed in the main at employees, and community-based insurance (National Health Insurance)
directed at those engaged in agriculture, forestry and fisheries, the self-employed, retires and others.
Employees’ insurance is further divided, in accordance with those covered, into Health Insurance,
Seamen’s Insurance and various mutual aid associations. Also, at the age of 75 (65 in the caseof the bedridden, etc.), all citizens withdraw from their previous medical insurance and join anindependent medical system for the elderly (Medical Care System for the Advanced Elderly).
Health Insurance provides insured persons with medical care and cash benefits fornonoccupational sickness and injury, childbirth, and death, and dependents of the insured person
for sickness, injury, childbirth and death. Applications for Health Insurance are conducted on aworkplace-establishment basis. Incorporated workplaces and workplaces that employ five or more
employees at all times in certain industries are applied to Health Insurance mandatorily. Employees
who are always employed at the applied workplaces become compulsorily insured persons under
Health Insurance.
Health Insurance is operated by Health Insurance Societies (Society-managed HealthInsurance) and by the Japan Health Insurance Association (Association-managed Health Insurance).
There are two types of Health Insurance Societies: a Single Health Insurance Society establishedat a single workplace, and a General Health Insurance Society jointly established by two or more
employers engaged in the same type of industry. For relatively small establishments where noHealth Insurance Society is organized, the Japan Health Insurance Association will carry out healthinsurance operations.

[1] Application
1. Insured Persons(1) Compulsorily Insured Persons
Workers employed by the applied workplaces under the Health Insurance Act.
(2) Voluntarily and Continuously Insured Persons
Persons who, having forfeited their eligibility for coverage due to retirement or for other reasons,have been insured continuously for at least two months prior to the forfeiture, can in principle upon
application retain their eligibility as insured persons for two more years.
2. Dependents
Those who have an address in Japan,(1) Lineal ascendants, spouse (including when not registered but the situation is the same as ifHealth Insurance and Health Insurance Societies in Japan1

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actually married), children, grandchildren, and brothers and sisters of the insured person,
whose livelihoods are mainly supported by him/her.
(2) Relatives up to the third degree of the insured person, who belong to the same household as
the insured person, and whose livelihoods are mainly supported by him/her.
(3) The parents and children of a person acting as the spouse actually in a marital relationshipwith the insured person although not registered as such, who belong to the same household
as the insured person, and whose livelihoods are mainly supported by him/her.
(4) The parents and children of a person acting as the spouse actually in a marital relationshipwith the insured person although not registered as such, who belong to the same household
as the insured person even after the acting spouse dies, and whose livelihoods are mainly
supported by him/her.
can receive benefits as dependents without paying insurance premiums.
* In principle, persons eligible for “whose livelihoods are mainly supported by him/her” are required
to have an annual income of less than 1.3 million yen.

[2] Financial Resources
The main financial resources are insurance premiums, and state subsidies are provided for some
expenses such as administrative expenses.
The insurance premiums are calculated by multiplying the insured person’s remuneration by
the premium rate. Remuneration as stipulated for health insurance includes monthly salary, bonuses,
allowances and all other forms of compensation for work received by the insured person from theemployer. The insurance premium rate is set within a range from 3.0% to 13.0% for both the Health
Insurance Society and the Japan Health Insurance Association. In the case of the Health InsuranceSociety, the insurance premium rate is set by each Society. While, in principle, the employer andthe insured person share the burden equally, if stipulated in the Society rules, the employers’ share
may be larger. In the case of the Japan Health Insurance Association, the insurance premium rateis decided by each prefectural branch, and the insurance premium is borne equally by the insured
person and the employer.

[3] Benefits
As far as health insurance is concerned, when insured persons or dependents are sick or injured,in principle they receive medical care in the form of benefits-in-kind. However, if for someunavoidable reason it is not possible to receive benefits-in-kind, they first pay the full amountrequired for the treatment out of their own pocket and then have this payment minus patient costsharing reimbursed. In addition to this, transportation expenses, injury and sickness allowance,
funeral expenses, the childbirth and childcare lump-sum grant, childbirth allowance and the like are

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provided for as cash benefits. Health Insurance Societies can also provide additional benefits on topof these statutory benefits.
The benefit ratio varies with age. For the child prior to commencing compulsory education,
up to the first March 31st after the month of attaining six years of age, it is 80%. From then until theage of seventy it is 70%, and after reaching seventy years old it is 80% (70% if still working withan income the same level as active workers), with a given maximum established for cost-sharing at
a fixed rate borne by the patient.

Mechanism of Health Insurance SystemPatients(Insured persons, Dependents)

Insured persons

Medical consultation and treatment
Insurance medical care facilities
Patient cost-sharing

Employers
Medical fee claims

Insurance premiums

Medical fee claims

Health Insurance Societies(Insurers)

Medical fee payments

Claim-check andfee payments

Health Insurance Claim Review &Reimbursement Services(HICRRS)

II. Health Insurance Societies[1] Organization and Functions
A Health Insurance Society is a self-managed insurance carrier. By Health Insurance Act, a Society
can be established by an employer acting independently or by two or more employers acting jointly,applying to and obtaining approval from the Minister for Health, Labour and Welfare. For approval
it is necessary to have at least 700 employees when a Society is established at a single workplace(Single Health Insurance Society), and at least 3,000 employees when a Society is established by
two or more employers (General Health Insurance Society). In addition, the Society can also beestablished by a number of employers in different industries centered on a given area.
A Health Insurance Society has a number of advantages. In the first place, because HealthInsurance Society members participate directly in the management, the Society is run autonomously
and democratically. This is the most distinctive feature of Society-managed Health Insurance.
Because they possess this independently run organization, it is easy to clearly assign responsibility,

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and they can work hard at the job of administering. Secondly, in that the Society is run efficiently
and effectively, the employer’s cooperation is easily obtainable. Thirdly, the Society always has
a firm grasp of how insured persons lead their everyday lives, takes actions pertaining to thecircumstances, and is capable of providing detailed services to its members.
So that they can be run democratically, all of Health Insurance Societies are organized
as follows.
1. Deliberative Organ (Society Committee)
The Society committee is the supreme deliberative organ of the Health Insurance Society.
In that the Society is made up of employers and insured persons, the committee comprises
representatives from both sides so that it can democratically reflect the intentions of the members.
The management side is made up of “appointed members” nominated by the employer, while theinsured members’ side comprises “elected members” chosen by them. For both sides’ interests tobe impartially represented, equal numbers of committee members are appointed and elected. The
opinions of both sides are expressed in the committee and reflected in the running of the Health
Insurance Society.
The most important matters to be decided by the Society Committee are follows: altering
the rules, budgeting for income and expenditure and operations plan, settlement of accounts andoperation reports, matters stipulated in rules and regulations and other important matters.
2. Executive Organ (Board of Directors)
The board of directors is made up of individuals co-opted by the Society committee members. As
the organ which actually executes the operation and makes the decisions pursuant to policy of the
Health Insurance Society democratically determined by the committee, the board has an importantpart to play in the running of the Society.

[2] Undertakings
Health Insurance Societies are engaged in the following operations in addition to basic services
such as the application of insured persons (eligibility management), setting/levying of insurance
premiums, providing insurance benefits, examination/payment of medical fees, etc.
1. Rationalization of Medical Care Costs
The claim statements submitted by the medical care facilities are examined by the Health Insurance
Claims Review & Reimbursement Services (HICRRS). However, there are times when calculation
errors and inappropriate content are overlooked. Therefore, Health Insurance Societies recheck thestatements, and in cases where errors and inappropriate medical treatment are detected, they ask theHICRRS to reexamine the details and put things right. Furthermore, they inform the patient as to

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how much the treatment costs for the purpose of heightening the individual's awareness regarding
the expense, while at the same time preventing unjust claims.
2. Health Activities
One of the special features of the Health Insurance Society is that it can, in collaboration with theemployer, implement health activities consonant with the conditions prevailing in the company.
For example, the Society is implementing a data health plans that aims to implement more effective
and efficient health services according to the characteristics of subscribers (employees and families)
by utilizing the specific health checkups and the specific health guidance which are focusing on
metabolic syndrome, and electronic data. Furthermore, in recent years, Health Insurance Societies
and employers have collaborated to actively engage in “Collabo Health (health collaboration)”
which effectively and efficiently promotes the health of subscribers under a clear division of roles
and a good working environment. Consideration of the working environment and the health ofemployees is also emphasized as an index for evaluating companies, and “Collabo Health (healthcollaboration)” by Health Insurance Societies and employers contributes to improving the image
and productivity of companies.
3. Patient Cost-Sharing Reimbursements and Additional Benefits
The Health Insurance Society can implement a system in effect to reimburse the insured personof part of the 30% (or 20%) patient cost-sharing incurred when receiving medical care or whenhospitalized for the purpose of mitigating the insured person’s liabilities by stipulating in the rules.
Furthermore, an important distinguishing feature of the Society is that, if the Society has a financial
surplus, it provides additional benefits on top of statutory benefits. However, additional benefits
are for lightening the burden of patient cost-sharing upon receipt of statutory benefits; they are notbenefits to cover special ward charges or medical care not sanctioned under statutory benefits. Thecontents differ depending on the particular way the Society is run and its financial circumstances.

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