[2024 Latest] 6 Ways to Reduce National Health Insurance Premiums for Sole Proprietors

In this article, I have picked out 6 measures to reduce National Health Insurance premiums for sole proprietors.

I have packed in everything I can think of from my 15 years of experience working at a social insurance office, so I think you will find it helpful!

▼ Here is a bit about me

[Basic Premise] How are National Health Insurance premiums calculated?

Before introducing tax-saving measures for National Health Insurance, I will briefly explain how it is calculated, as some background knowledge is necessary.

National Health Insurance is operated by each local government (the area where you live) across the country. Therefore, a characteristic feature is that premiums vary by municipality.

Generally, municipalities with stable finances (where tax money and other funds are collected and managed) tend to have lower premiums, while those that are not tend to have higher ones.

The specific premium is determined by the total of
"Income-based levy"
"Per-capita levy"
"Per-household levy"
"Asset-based levy"
and these amounts.

In addition...

1. Previous year's income amount
2. Number of family members and their ages

It is calculated based on these factors, but the calculation method is very complex, so it would be very difficult to memorize it all.

However, what can be said from this is that National Health Insurance premiums are greatly influenced by the previous year's income amount.

Income amount refers to the amount remaining after subtracting expenses from sales, right?

In other words, to lower National Health Insurance premiums, you need to use expenses wisely to lower your income amount.

Once you understand this, we can finally get to the main topic.
I have summarized three main measures to increase expenses.

I will explain them one by one.

1. Blue Return Special Deduction

There are two types of tax returns for final income tax returns: "White Return" and "Blue Return"...

In conclusion, for those who want to save on National Health Insurance premiums, the "Blue Return" is recommended.

A Blue Return is a filing method where you keep and submit slightly more complex books called double-entry bookkeeping.
You can receive special deductions in stages: 650,000 yen, 550,000 yen, or 100,000 yen.
Also, besides tax-saving effects like carrying over losses, there are various other benefits.

If you want to lower your National Health Insurance premiums, you should prioritize considering the Blue Return first.

2. Blue Return Family Employee Salary

A Blue Return family employee is a family member working under a business owner who files a Blue Return.
Normally, you cannot treat salaries paid to family members as expenses, but by becoming a Blue Return family employee, you can treat the entire salary as an expense. (There are detailed requirements to become a family employee.)

I think the point here is that "salaries to family members become expenses"... Generally, expenses have a tax-saving effect, but money also leaves your hands, right?

However, with family employee salary, because money moves between family members in the form of a salary from the business owner to the family employee, the tax-saving effect is higher when viewed at the household level (without reducing the money on hand).

Points to note are that family employee salary is only recognized for the amount commensurate with the labor, and it cannot be said that the National Health Insurance will become cheaper just by increasing the salary.

Since this requires specialized knowledge, it is best to confirm with a tax accountant regarding the family employee system and with your local municipality regarding detailed calculation methods.

3. Management Safety Mutual Aid (Bankruptcy Prevention Mutual Aid)

Sole proprietors face various risks, such as not receiving payments for accounts receivable due to the bankruptcy of a business partner.
The Management Safety Mutual Aid is a mutual aid system for such small and medium-sized enterprises and sole proprietors to prevent unforeseen situations that could happen at any time.

It might be easier to understand if you think of it as "insurance" for self-employed people.

The premiums for this mutual aid are fully tax-deductible!Therefore, it is a recommended tax-saving measure for business owners who want to lower their National Health Insurance premiums.

However, when you withdraw from this mutual aid, it is counted as "income." You need to be careful because if you get the timing wrong, you will end up paying more taxes than you saved.

[Bonus] Moving to an area with lower National Health Insurance premiums

At the beginning, I explained that the calculation method for National Health Insurance premiums differs by municipality.

From this, you can see that even with the same income amount, there is a difference in premiums depending on the region.

I tried simulating it on a National Health Insurance premium calculation site, and I would like to share the surprising numbers that came out.

As a result of comparing under these conditions...
[Annual National Health Insurance Premium]
Setagaya Ward => 347,800 yen
Yokohama City => 357,100 yen
Osaka City => 438,300 yen

Surprisingly, in places with a large difference, there was a result showing a difference of about 100,000 yen in monthly insurance premiums.

If you are considering moving in the future, it might be interesting to check the insurance premiums on the city's website.

Now, having read this far, you might be thinking,
"I'm already using all the expenses I can! Are there any other ways to lower the national health insurance premium?"

From here on, I will explain mechanisms to lower insurance premiums using methods other than the national health insurance.

Actually, you can stop using the national health insurance.

Since the national health insurance is a public insurance, all citizens are required to join it.
However... there is actually a rule that says it's okay as long as you are enrolled in social insurance, even if it's not the national health insurance!

The other methods are as follows:

Let's look at each one in detail.

4. National Health Insurance Associations by Industry

There are two types of national health insurance: one operated by municipalities and one operated by industry-specific associations.

Normally, we join the national health insurance operated by municipalities, but for sole proprietors like us, there are associations that have created their own insurance systems for people working in the same industry.

That is the National Health Insurance Association. (Hereinafter referred to as the NHI Association)

A major feature of the NHI Association is that the insurance premium is a fixed monthly amount.

Since it does not affect the insurance premium no matter how much you earn, it can be said that the higher your income, the more advantageous it is.

However, since the number of family members is counted based on age, etc., it is important to compare which is more advantageous: the national health insurance operated by the municipality or the NHI Association.

Also, there are many industries that can join the NHI Association.
Representative examples include construction, doctors, pharmacists, designers, etc...

Please check for yourself for more details.▶Reference Site

5. Micro-Corporation

The "micro-corporation" has become a hot topic in recent years.
A micro-corporation refers to a company managed by just one business owner.

It is not about a sole proprietor incorporating their business, but rather "juggling" both a sole proprietorship and a corporation, which might be a bit difficult to visualize.

The reason it reduces National Health Insurance (NHI) premiums is that by enrolling in health insurance through the micro-corporation, you can withdraw from the NHI you were previously enrolled in.
At this time, by setting the salary you receive from the micro-corporation low, you can keep social insurance premiums low, which ultimately leads to savings on NHI.

Micro-corporations are also effective for saving on pension costs.

Therefore, if you are running multiple businesses, you may be able to comprehensively save on NHI, pension, and taxes by effectively separating your sole proprietorship from your corporation.

However, there are many points to be aware of when setting up a micro-corporation. It is important to understand these and carefully judge whether it is worth doing.

6. Social Insurance Services

Simply put, social insurance services are services that allow sole proprietors to save on NHI and pension premiums.

By joining a social insurance service, you can enroll in social insurance while still running your sole proprietorship.

For example, in the case of a married couple, those who pay more than 140,000 yen per year in National Health Insurance premiums often succeed in significantly reducing their costs by using social insurance services.

~~~~~ ~~~~~ ~~~~~

Our company, Solo Concierge, provides social insurance services that sole proprietors can join.

There are various benefits like these...!

If you are troubled by high National Health Insurance premiums, please check the video below to learn more about Solo Concierge ^^

◆ Service Introduction Video (YouTube)

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Summary

In this article, we introduced 6 measures for National Health Insurance for sole proprietors.

To keep National Health Insurance premiums down, it is important to first thoroughly check if there are any expenses you have forgotten to include.

After that, why not try implementing the measures that seem feasible for you?

The income of a sole proprietor is unstable.That is precisely why I believe that how you save on taxes with the income coming in now and how you increase your take-home pay will change the future fate of your business based on the decisions you make today.

If only I had studied back then...
If only I had taken action back then...

To ensure you don't have such regrets, I want you to prioritize learning first.

See you later!