Did you know? Financial Assistance During Parental Leave
When taking childcare leave, one of the main concerns is money. Some may worry that their income will decrease and their family finances will become more difficult….
In this issue, Kenji Kaneko, a financial planner, explains the benefits during childcare leave and the treatment of social insurance premiums and taxes.
For more information on childcare leave, please refer to this article.
Kenji Kaneko, Financial Planner
Table of Contents
- How much childcare leave benefit can I receive?
- Exemption from social insurance premiums you need to know about
- Benefits are tax-free! Benefits and exemptions cover about 80% of your pre-lost time
How much childcare leave benefit can I receive?
During childcare leave, ” childcare leave benefits ” are provided if certain requirements are met.
Let’s take a look at an overview of childcare leave benefits.
If you take childcare leave to care for a child under one year of age (one year and two months if both parents take the leave, or up to two years of age if the child is not admitted to a daycare center, etc.), childcare leave benefits will be paid to you.
The following requirements must be met in order to receive childcare leave benefits
(1) Must be covered by employment insurance
(2) At least 12 months of working 11 or more days in the two years prior to the start of childcare leave.
In addition, for those who are employed for a fixed period of time, such as part-time workers, it is also a requirement that it is not clear that the labor contract will expire before the child turns one year and six months old.
Payment period
| For mothers | For fathers |
| From 8 weeks after birth until two days before the child’s first birthday (A maternity allowance system is available during the period of prenatal and postnatal leave.) |
From the date of birth to two days before the child’s first birthday |
allowance
| Start of absence – 180 days | After 181 days |
| Daily wage at the start of absence × number of days paid × 67 (There is an upper limit. If the number of days of payment is 30 days, approximately 310,000 yen is the upper limit) |
Daily wage at the start of absence × number of days paid × 50%. (There is an upper limit. If the number of days of payment is 30 days, approximately 230,000 yen is the upper limit) |
*Daily wage at the start of leave…the amount obtained by dividing the wage for the six months prior to the start of childcare leave (in principle, prior to the start of maternity leave if maternity leave is taken before or after childbirth) by 180.
Let’s look at an example calculation to get an approximate idea of how much will actually be paid.
Calculation example
▶Example 1
If the monthly wage is 300,000 yen (*monthly wage × number of days paid at the start of leave)
From the start of absence to 180 days: 300,000 yen x 67% = approx. 200,000 yen
After 181 days from the start of absence 300,000 yen x 50% = 150,000 yen
▶Example 2
If the monthly wage is 500,000 yen
From the start of absence to 180 days: 500,000 yen x 67% = approx. 340,000 yen However, since the upper limit is approx. 310,000 yen, approx. 310,000 yen will be paid.
After 181 days from the start of absence 500,000 yen x 50% = 250,000 yen However, since the upper limit is approximately 230,000 yen, approximately 230,000 yen will be paid.
Note that the higher the ◆monthly wage, the greater the difference between the actual wage and the childcare leave benefit.
◆If a certain amount of wages are paid by the employer, the Childcare Leave Benefit will be partially or fully suspended.
Exemptions from social insurance premiums you need to know about
Social insurance premiums during childcare leave
During childcare leave, social insurance premiums such as health insurance premiums and employee pension insurance premiums are exempted.
In addition, during the period of exemption, it is considered as a period of payment of pension premiums, and health insurance benefits are also available as usual.
Furthermore, if no salary is paid while receiving childcare leave benefits, no unemployment insurance premiums are owed.
What is the period of exemption from social insurance premiums?
Social insurance premiums will be exempted from the month in which the childcare leave starts until the previous month of the month that includes the day following the scheduled termination date.
In addition, if a short period of childcare leave is taken in the middle of a month, social insurance premiums will be exempted as long as the leave is taken for at least 14 days during the same month.
In addition, social insurance premiums for bonuses are exempted only when the employee has taken childcare leave for more than one consecutive month, including the last day of the bonus month.
Benefits are tax-free! Benefits and exemptions cover about 80% of your pre-lost time
No income tax is imposed on the Childcare Leave Benefit. In addition, the Childcare Leave Benefit is not reflected in the calculation of the resident tax for the following fiscal year.
According to estimates by the Ministry of Health, Labor and Welfare, if you take childcare leave and receive childcare leave benefits, by exemption from social insurance premiums and reduced income tax,
and income tax reductions, approximately 80% of the wage
The amount of the benefit is approximately 80% of the wage earned prior to the leave.
We believe that those who are concerned about their income during childcare leave will be able to take childcare leave with peace of mind by learning about these financial support systems. We hope that you will take advantage of these systems and spend your precious time with us.
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