Introduction
Japan's so-called "income walls" — social insurance thresholds that discourage part-time workers from earning more — are undergoing major reform in 2026. From April 2026, the method for testing the ¥1.3 million dependent threshold changes, and from October 2026, the ¥1.06 million wage requirement is abolished entirely.
The ¥1.3 Million Wall: New Assessment Method (April 2026)
Previous Rule
Dependent status under Japan's health insurance was assessed by estimating a worker's total annual income over the coming year, including overtime pay. This meant that a busy month with extra overtime could push a worker over the ¥1.3 million limit and knock them off their spouse's insurance.
New Rule: Contract-Based Assessment
From April 2026, annual income is assessed based on the wages stated in the employment contract (labor conditions notification), not actual earnings.
| Item | Old Rule (until March 2026) | New Rule (from April 2026) |
|---|---|---|
| Basis | Projected annual income | Contract-stated annual income |
| Overtime pay | Included in full | Generally excluded* |
| Commuting allowance | Included in full | Included in full (unchanged) |
| Bonuses | Included | Included if stated in contract |
*Fixed overtime allowances (included in the contract) are still counted.
Example
A worker's contract states base pay + allowances = ¥1.2 million/year. With overtime, actual earnings reach ¥1.38 million. Under the new rule, dependent status is maintained because the contract-based figure is under ¥1.3 million.
The ¥1.06 Million Wall: Abolished (October 2026)
Current Requirements
Part-time workers must enroll in employees' pension insurance if all five conditions are met:
- Weekly hours ≥ 20
- Monthly wage ≥ ¥88,000 (≈ ¥1.06M/year)
- Employment expected to exceed 2 months
- Not a student
- Employer has 51+ employees
What Changes
The monthly wage requirement (item 2) is abolished. Workers with weekly hours of 20 or more will enroll in employees' pension regardless of income.
| Date | Change |
|---|---|
| October 2026 | Wage requirement (¥88,000/month) abolished |
| October 2027 | Firm-size threshold (51+ employees) phase-out begins |
| October 2029 | Individual businesses (5+ employees) included |
| October 2035 | Firm-size threshold fully abolished |
Impact
The Ministry of Health, Labour and Welfare estimates approximately 2 million workers will newly qualify for employees' pension:
| Category | Estimated Number |
|---|---|
| Category 3 insured (spouse dependents) | ~900,000 |
| Category 1 insured (national pension only) | ~700,000 |
| Non-enrolled workers aged 60+ | ~400,000 |
Premium Relief
For workers earning under ¥1.56 million/year (less than ¥130,000/month), employers may choose to shoulder a larger share of premiums than the standard 50/50 split, cushioning the impact on take-home pay.
Practical Considerations
For Part-Time Workers
- After April 2026, your labor conditions notification determines dependent status — confirm its accuracy with your employer
- After October 2026, employees' pension enrollment is based on hours, not income — but enrollment increases your future pension benefits
- Run a take-home pay simulation to understand how the changes affect you
For Employers
- Ensure labor conditions notifications are accurate — they now directly affect dependent assessments
- Budget for increased social insurance costs from October 2026 onward
- Consider the premium relief measure for employees earning under ¥1.56 million
