U.S. social security administration makes it clear you pay one or the other. (Totalization Part 2)

What you see below is coming from this link: Description of the U.S.-Japanese Social Security Agreement”

Despite the chuckles you might get from seeing Japanese hoken and nenkin systems referred to, straight out, as “taxes” (at least as of 2010), the American Social Security Administration makes it really clear that the totalization treaty requires you to be in the Japanese health care system.

The treaty “exemption” is along the lines of the screen shot above. You don’t just go out and buy your Health One gap policy and then prattle or mumble something about a treaty. The only exemption the Japanese are going to accept is the “USA/J – 6” certification.

This means you:

– certify that you won’t be using the Japanese health care system. Like I keep saying, this sounds scary.

– certify that you will be paying the SE tax at 15.3% on your first $106,800 equivalent of Japan compensation. This includes the under-the-table money, and/or the money your closely-held “K.K.” is paying you, etc., etc.

To quote a famous gossip site on the expat health care issue:

“What’s this all about?”

Well, the Bush Administration wouldn’t agree that Americans sent to Japan by their employers should be required to carry health insurance. This was a big sticking point that the delayed the treaty for several years. Finally, the Japanese said, fine, you don’t have to carry it if you meet the express terms of an exemption and you also agree not to use the health system.

Because if you don’t pay in along the way, and only pay when you need to use the health care system (while everyone else is contributing to maintain it), you really aren’t part of the insured pool. Insurance only works because everyone agrees that they will cover anyone who needs. Not that they’ll let you, the nonparticipant, in anytime you need.

As a practical matter, I don’t know how the American companies that went with the “USA/J – 6” requirements are making out with that. Because to me, that sounds like you’re asking your employees to take a huge risk. As an insurer, even, you are agreeing to cover people who might not be eligible to go to a hospital, by previous agreement(!), and opening yourself up to a ton of legal liability either in tort judgments or regulatory fines back home. Probably both.

If I had a heart attack, the last thing I’d want is to have to make arrangements to fly back home for treatment.

So when your favorite goofy site on the net is telling you that you can “exempt yourself” from health care coverage due to a “totalization treaty”, get a second opinion.

(P.S. Japan doesn’t have just one treaty with all the other countries. Each, like the U.S.-Japan one, is its own separate treaty. So if you aren’t an American citizen, find out the rules in yours.)

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