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

Receiving a 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 Disabled Individuals to Be Dependents While Receiving a Disability Pension

The condition for a person with a disability 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.”

Generally, a dependent of a social insurance policyholder must belong to the same household and have 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? | National 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 quite possible to work while receiving a disability pension.

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

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

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

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

2. Procedures When Exiting Dependent Status While Receiving a Disability Pension

2-1. Switching Social Insurance

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

When you exit dependent status, you need to switch your National Pension qualification from Category 3 insured person to Category 1 insured person.

To switch to a Category 1 insured person, you must complete the procedure at the municipal office and start paying the National Pension premium yourself once you receive the "National Pension Insurance Premium Receipt (Payment Acceptance) Notice" (payment slip).

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

However, if you can join your employer's social insurance, you will need to complete the procedures for joining the company's health insurance and employee pension insurance.

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

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

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

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

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

If you can join at your workplace, you will pay your 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 Exiting Dependent Status?

As previously explained, exiting dependent status incurs an obligation to pay National Pension premiums.

However, if you qualify for a disability pension of grade 2 or higher, the "legal exemption system" applies, and your National Pension premiums are fully exempted.

The procedure for the legal exemption system for National Pension premiums requires submitting the "Notification of Reason for Exemption (Applicable/Termination)" to the city or town hall.

Moreover, the exemption period can be applied retroactively, so if you have already paid premiums, they will 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 per month for periods before March 2009 and one-half per 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 receive the full pension amount for the exemption period, you can increase the amount of the old-age basic pension by paying back within 10 years.

4. Deductions Available to Disability Pension Recipients

4-1. Eligible Individuals for Disability Deductions

Disability pension recipients, or those with a spouse or dependent with a disability who share the same household, are eligible for disability deductions.

Eligible individuals for disability deductions are categorized into three types: "Disabled," "Specially Disabled," and "Co-residing Specially Disabled," with definitions as follows.

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

• Individuals judged to have an intellectual disability by a child consultation center, intellectual disability rehabilitation consultation center, mental health welfare center, or designated mental health physician
• Individuals who have been issued a mental disability health and welfare certificate under the Mental Health and Welfare 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 who have been issued a war injury and sickness certificate under the War Injury and Sickness Special Aid Act

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

• Individuals judged to have a severe intellectual disability
• 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 sickness certificate with a disability degree from special item symptom to third item symptom under the Pension Act
• Individuals recognized by the Minister of Health, Labor and Welfare under the Act on Assistance for Atomic Bomb Survivors
• Individuals who have been bedridden for more than six months as of December 31 of the year and require complex care (recognized as unable to perform tasks such as bowel movements without assistance)
• Individuals aged 65 or older recognized by the mayor, special ward mayor, or welfare office director

Eligible individuals for co-residing special disability (those who meet all conditions):

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

Reference: No.1160 Disability Deductions | National Tax Agency

For disabled and specially disabled individuals, the person themselves is the eligible individual, while for co-residing special disability, it refers to parents or family members supporting a disabled relative.

4-2. Income Tax Deductions and Dependent Deductions

Disability pension recipients or those with a spouse or dependent holding a disability certificate are eligible for "income tax disability deductions" and can receive a certain amount of 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 highest deduction amount being 750,000 yen for "co-residing specially disabled."

Income tax disability deductions also apply to dependents under 16 years old who are not eligible for dependent deductions.

If you're interested in income tax filing, please also check out

.

4-3. Inheritance Tax Deductions

The inheritance tax disability deduction 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 by whether the inheritor is classified as a "general disabled" or "specially disabled" person.

You can check the classification of general and specially disabled individuals 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 Disabled: "100,000 yen × (85 years old − age of the disabled at the start of inheritance)"
Specially Disabled: "200,000 yen × (85 years old − age of the disabled at the start of inheritance)"

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

For general disabled individuals:

100,000 yen × (85 − 40 years old) = 4,500,000 yen deduction

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

4-4. Gift Tax Deductions

To secure living expenses for specific disabled individuals, receiving property based on certain trust agreements is exempt from gift tax.

Specific disabled individuals include those with mental disabilities among specially disabled individuals and others with disabilities.

Examples of those classified as specially disabled are as follows.

• Individuals with a physical disability certificate of grades 1 or 2
• Individuals with a mental disability health and welfare certificate of grade 1
• Individuals judged to