Exclusive Health Insurance for Japanese Startups Launched... Health Insurance Premiums Reduced by 20%

Startup Health Insurance Association Expected to Launch Next Year
Insurance Premium Rates Anticipated to Decrease by 1-2 Percentage Points
Japanese Government Hopes to Promote Startup Job Mobility

The Japanese startup industry has initiated the formation of a health insurance association targeting venture capitalists (VCs) and startup employees. If the association is launched next year after government approval, it is expected to significantly reduce the health insurance premium burden for the Japanese startup sector.

According to the Nihon Keizai Shimbun on the 30th, the Japan Startup Corporation applied to the Japanese Ministry of Health, Labour and Welfare earlier this month to establish a health insurance association for VCs and startups. Assuming the Ministry’s approval process proceeds as scheduled, the association is set to launch next year. Once officially approved, 360 startups are expected to enroll in health insurance through this association.

Currently, Japan’s health insurance system requires employed individuals to pay health insurance premiums through one of the National Health Insurance Associations, health insurance associations, or private school mutual aid associations. Large corporations can form their own health insurance associations, but startups, due to their smaller size, can only enroll through the National Health Insurance Association.

The startup industry has pointed out that enrolling through the National Health Insurance Association increases the premium burden for both employers and insured individuals. The National Health Insurance Association has a high proportion of middle-aged and older members, resulting in higher premiums due to increased disease risk. The average age of employees in Japanese startups is 34 years old, whereas the average age of insured members in the National Health Insurance Association is 46 years old. For this reason, startup employees have health insurance premium rates at least 1 percentage point higher compared to employees at large corporations who can form their own associations (with premium rates around 9%).

The startup industry expects that forming the association will greatly reduce the insurance premium burden. The average monthly salary of the 360 startups that have expressed intent to join the association is 500,000 yen, with a 10% premium rate applied, meaning both employers and employees each pay 50,000 yen in health insurance premiums. However, if they join the startup association, the premium rate can be lowered to around 8%, reducing the premium to about 40,000 yen.

Thanks to the advantage of lowering premium burdens, the industry anticipates that at least 5,000 to 6,000 insured individuals will express their intention to join the association. Large independent venture capital firms such as ANRI have also actively expressed their willingness to join.

The government is also likely to support this industry initiative. The Kishida Fumio Cabinet announced in June, as part of the government’s core economic policies, a revised “New Capitalism” plan that includes support for establishing health insurance specifically for startups.

The Nihon Keizai Shimbun reported, "As salaries in the startup industry continue to rise, the wage gap with large corporations has narrowed, but welfare benefits remain poor," adding, "The establishment of a health insurance association will lead to improved working conditions and promote job transitions to startups."