Can You Receive Disability Pension While Being a Dependent? Comprehensive Guide to Conditions and Systems!

Receiving disability pension can provide both mental and financial stability, making it easier to focus on treatment and rehabilitation.

Additionally, many people who receive disability pensions also work and earn an income.

However, when working while receiving a disability pension, the issue of "dependents" often arises.

"Can you be a dependent while receiving a disability pension?"
"What are the conditions that require you to leave the dependent status?"

This article aims to resolve such questions, so please use it as a reference.

1. Conditions for a Person with Disabilities to Be a Dependent While Receiving a Disability Pension

The condition for a person with disabilities to be a dependent while receiving a disability pension is that the total of the disability pension and other income must be less than 1.8 million yen and less than half of the insured person's annual income.

Typically, the dependent of a social insurance insured person is defined as someone who belongs to the same household as the insured person, with an annual income of less than 1.3 million yen and less than half of the insured person's annual income.

Reference: Who is a Dependent? | Japan Health Insurance Association

However, if the dependent is over 60 years old or has a disability that qualifies for a disability welfare pension, the income limit is relaxed to less than 1.8 million yen.

Therefore, it is entirely possible to work while receiving a disability pension.

For example, if you are certified as having a third-degree disability pension, the minimum guaranteed amount is 596,300 yen annually, which translates to a monthly amount of 49,691 yen.

In this case, the annual income for working within the dependent status is 1,203,700 yen, with a monthly income of 100,308 yen.

In other words, to work within the dependent status while receiving a third-degree disability pension, your monthly income must be less than about 100,000 yen.

However, this is merely a model case for a third-degree disability pension recipient, and the conditions for being a dependent may vary depending on the pension grade and amount received. For now, remember that if your income is less than 1.8 million yen, you can work and still be a dependent while receiving a disability pension.

2. Procedures When You Are No Longer a Dependent While Receiving a Disability Pension

2-1. Switching Social Insurance

As previously explained, if your total annual income from the disability pension and employment exceeds 1.8 million yen, you must leave the dependent status.

When you are no longer a dependent, you need to switch your National Pension qualification from Category 3 insured person to Category 1 insured person.

To switch to Category 1 insured person, you must complete the procedure at the municipal office, and once you receive the "National Pension Insurance Premium Receipt (Payment Acceptance) Notification" (payment slip), you should pay the National Pension premiums yourself.

The deadline for switching social insurance is within 14 days from the date of qualification expiration, so you must complete the procedure promptly.

However, if you can join your employer's social insurance, you will need to proceed with the procedures for social insurance such as health insurance and employee pension at the workplace.

Next, let's explain the conditions for joining your employer's social insurance.

2-2. Conditions for Joining Employer's Social Insurance

Part-time and temporary workers become eligible for social insurance if their weekly scheduled working hours and monthly scheduled working days exceed three-quarters of those of full-time employees.

Additionally, even if the working hours do not meet three-quarters of full-time employees, you can join social insurance if you meet all the following conditions.

• Scheduled working hours of 20 hours or more per week
• Expected to work continuously for more than two months
• Monthly wage of 88,000 yen or more
• Not a student
• Working at a business with 101 or more employees (specified applicable business)
  *From October 2024, businesses with 51 or more employees will also be eligible

If you can join through your employer, you will pay employee pension insurance and health insurance premiums through payroll deductions.

The procedure for joining social insurance is generally done through the business, so it should not be too difficult.

3. What Happens to National Pension Premium Payments When You Are No Longer a Dependent?

As previously explained, when you are no longer a dependent, you are obligated to pay National Pension premiums.

However, if your disability pension is classified as second degree or higher, the "Statutory Exemption System" applies, and your National Pension premiums are fully exempted.

To apply for the statutory exemption system for National Pension premiums, you must submit the "National Pension Premium Exemption Reason (Applicable/Termination) Notification" to the city or town office.

Additionally, the exemption period can be applied retroactively, so if you have already paid premiums, they may be refunded if you qualify for the exemption.

The amount of the old-age basic pension for the exemption period is calculated as one-third of a month for periods before March 2009 and one-half of a month for periods after April 2009.

This means that even if the exemption is granted, the pension you receive in the future will be reduced.

However, if you want to make the pension during the exemption period full, you can increase the amount of the old-age basic pension by making additional payments within 10 years.

4. Deductions Available to Disability Pension Recipients

4-1. Eligible Individuals for Disability Deductions

If you are a disability pension recipient or a spouse or dependent relative of a person with disabilities living in the same household, you may be eligible for disability deductions.

Eligible individuals for disability deductions are classified into three categories: "Disability," "Special Disability," and "Co-resident Special Disability," with the definitions as follows.

Eligible individuals for disability (those who meet any of the following criteria)

• Individuals determined to have intellectual disabilities by a child consultation center, an intellectual disability rehabilitation consultation center, a mental health welfare center, or a designated mental health physician
• Individuals issued a mental disability health and welfare certificate under the Mental Health and Welfare for the Mentally Disabled Act
• Individuals listed as having a physical disability in the physical disability certificate issued under the Physical Disability Welfare Act
• Individuals aged 65 or older with mental or physical disabilities recognized by the mayor or welfare office director
• Individuals issued a war injury and disease certificate under the War Injury and Disease Special Assistance Act

Eligible individuals for special disability (those who meet any of the following criteria)

• Individuals determined to have severe intellectual disabilities
• Individuals with a physical disability certificate of grade 1 or 2
• Individuals with a mental disability health and welfare certificate of grade 1
• Individuals issued a war injury and disease certificate with a disability degree from special grade to grade 3 under the Pension Act
• Individuals recognized by the Minister of Health, Labor, and Welfare under the Act on Special Measures for Atomic Bomb Survivors
• Individuals who have been bedridden due to physical disabilities for more than six months as of December 31 of the year, requiring complex care (recognized as unable to perform activities such as defecation without assistance)
• Individuals aged 65 or older recognized by the mayor, special ward mayor, or welfare office director

Eligible individuals for co-resident special disability (those who meet all the following conditions)

• Individuals who are a spouse or dependent relative of a special disability living in the same household
• Individuals who always live with the taxpayer, spouse, or other relatives sharing the same livelihood

Reference: No.1160 Disability Deductions | National Tax Agency

For disability and special disability, the individual themselves is the eligible person, but for co-resident special disability, it refers to the parents or family members living with the disabled relative.

4-2. Income Tax Deductions and Dependent Deductions

Disability pension recipients and spouses or dependent relatives with a disability certificate are eligible for "Income Tax Disability Deductions" and can receive certain deductions.

The categories and deduction amounts for disability deductions are as follows.

Reference: No.1160 Disability Deductions | National Tax Agency

The deduction amounts vary by category, with the largest deduction amount being 750,000 yen for "Co-resident Special Disability."

Note that the income tax disability deduction applies even if you have dependent relatives under 16 years old who are not eligible for dependent deductions.

If you are interested in income tax returns, please also check

4-3. Inheritance Tax Deductions

The inheritance tax disability deduction is a system that allows a certain amount of inheritance tax to be deducted if the inheritor with a disability is under 85 years old.

The deduction amount is determined based on whether the inheritor is classified as a "General Disability" or "Special Disability."

You can check the classification of general and special disabilities on the National Tax Agency's website for reference.

Reference: Article 19-4 "Disability Deductions" | National Tax Agency

Let's look at the calculation formula for inheritance tax deductions.

General Disability: "100,000 yen × (85 years old − age of the disabled person at the start of inheritance)"
Special Disability: "200,000 yen × (85 years old − age of the disabled person at the start of inheritance)"

Applying specific inheritance ages to the above formula, the deduction amounts are as follows.

For general disability

100,000 yen × (85 − 40 years old) = 4.5 million yen deduction

If the deduction amount cannot be fully deducted from the inheritance tax of the disabled person, it can be deducted from the inheritance tax of the disabled person's obligor.

4-4. Gift Tax Deductions

To secure living expenses for specific disabled persons,