A colleague has been doggedly advising me to keep receipts from the hospital and pharmacy this year because she says I can claim it back if it exceeds 100’000 yen in a year, if you have either kokuho or private medical insurance coverage.
I’m a bit over 10 man, and have just recently taken a massive dip in my income. I need a dental operation and can just about fit it in this year, so I could go even higher on medical costs during this year if there was a benefit. I could just as easily postpose it to when I’m not so hard up.
My own googling suggests that you can claim 5 percent \*over\* 100’000 only. So for e.g. if I spent 110’000 yen on medical I could get a measly 500 yen back. She’s convinced I can get everything over 10 man back. She’s Japanese so I assume she’s knows better than me.
Am I missing something here?
If this is better suited to r/JapanFinance please let me know.
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7 comments
Not 100%, but you can claim the portion over 100,000 yen of your medical expense as your tax deduction. Depends on how high your taxable income is, the actual amount you save can be as low as 0 yen (income below the taxable threshold), or as high as 45% of your expense over 100k (income over 40 millions yen).
There is also a limit on how much medical deduction you can claim (I think around 2 millions yen).
There are two systems that you are confusing.
If your procedure is done with insurance, you will get a refund back from them if you file for it. This is the 高額医療費 system.
There is also a tax benefit that you are also getting wrong (you won’t get just 500 yen back, the amount is decided by your income for the year AND your taxes for the next year are also greatly reduced). This is the 医療費控除 tax deduction system.
Just because they are Japanese doesn’t make them an expert on health insurance. Best thing is to go to your city office and ask them. They would know the policy 100%
Basically the amount that goes over 100’000 yen can be substracted from your taxable income.
So if you’ve had 250’000 yen worth of medical expenses in a year for you and your dependents, and normally make 6’000’000 yen per year, your taxable yearly income would become 5’850’000 yen per year. Effectively you’ll get a refund for the tax paid over that difference in taxable income. Which is, indeed, not nearly as much as would be satisfying.
You’re taking about the 医療費控除. Assuming you make enough to owe income tax, the amount you can claim is the total amount over 100,000 yen up to 2,000,000. From that number you need to subtract any insurance payouts. You can see how to calculate it [here](https://www.nta.go.jp/taxes/shiraberu/shinkoku/tokushu/iryouhikoujo.htm). My medical expenses exceed 300,000 yen every year so I’ve done this a number of times. There are calculators that can help you see the exact amount you’ll get back.
The 5% you are seeing is in the case that you make less than 2,000,000 yen per year, the maximum out of pocket is equal to 5% of your income and not 100,000.
There’s also a maximum per month isn’t there, claimable from the city/area?
BTW, there is another tax credit called “Self Medication Tax Credit”.
That is, if you spend more than 12,000 yen on over-the-counter drugs in one year, what you can buy at Matsumoto-Kiyoshi, etc, you can deduct it from your taxable income.
The only requirement is that you have to take any sort of health check at a hospital during the year so that you have to show you are health conscious.
But not all OTC drugs are included as tax credit drugs. Not all, not many anyway. For example, Seirogan for stomachache is included.
You must choose between Self Medication or 医療費控除 that you are talking about. You can’t use both in one year.