Japan Long Term Care Market Overview, 2031

Key Insights

• Japan is the world's most aged country among nations with populations exceeding 40 million. As of September 2025, the population aged 65 and above reached a record 36.19 million, representing 29.4% of the total population the highest proportion globally. Women accounted for 20.51 million of the elderly population, exceeding men by 4.83 million.
• The Long-Term Care Insurance system serves millions of beneficiaries. According to the Ministry of Health, Labour and Welfare's "Long-Term Care Insurance Business Status Report (October 2025 provisional)," the number of certified individuals requiring care or support reached 7.354 million, an increase of 138,000 from the previous year. Among these, approximately 4.98 million were women and 2.36 million were men.
• Japan's long-term care infrastructure is extensive. According to the Ministry of Health, Labour and Welfare's December 2025 report, approximately 4.48 million people received home-based care services (including home care and community-based services), while approximately 970,000 received institutional care services. The Special Nursing Homes for the Elderly (Tokuyo) sector serves 584,910 residents.
• Japan faces a severe long-term care workforce crisis. According to Ministry of Health, Labour and Welfare estimates, Japan currently requires 2.4 million care workers but faces a shortage of 250,000, which could expand to 570,000 by 2040. Over 64% of Special Nursing Homes report staff shortages.
• Nursing care costs under the Long-Term Care Insurance system have grown substantially. According to Japan's Fiscal System Council, nursing care costs are estimated to total 14.3 trillion yen in fiscal 2025, about four times the level in 2000, when the program was established. These costs are projected to reach 27.6 trillion yen in fiscal 2040.

Market Outlook

• According to the research report, "Japan Long Term Care Market Overview, 2031," published by Bonafide Research, the Japan Long Term Care Market is anticipated to add to more than USD 65.52 Billion by 2026–31. This growth is supported by sustained demographic aging, the universal coverage of the Long-Term Care Insurance system, and the ongoing expansion of home- and community-based care services.
• Japan's demographic trajectory is a primary driver of long-term care demand. With 29.4% of the population already aged 65 and above, Japan has the highest proportion of elderly among major economies. The National Institute of Population and Social Security Research projects the senior population will reach 39.28 million by 2040, making up 34.8% of the total population. Japan also has a notably high proportion of people aged 75 or older, at 17.2%, far exceeding other nations with large elderly populations. This "shrinking supporters and expanding dependents" dynamic creates sustained demand for long-term care services across all segments.
• The Long-Term Care Insurance system continues to expand its reach. In fiscal year 2025, LTCI expenditures reached 14.3 trillion yen, approximately four times the level at the system's inception. With certified care recipients reaching 7.354 million in 2025 and primary insured persons at approximately 35.9 million, the system's scale continues to grow. However, expenditures are projected to reach 27.6 trillion yen in fiscal 2040, placing significant pressure on the system's sustainability.
• The home care and community-based care sectors are expanding rapidly. As of December 2025, approximately 4.48 million people received home-based care services (home care), with an additional 940,000 receiving community-based services and 970,000 receiving institutional care services. The government's policy focus on maintaining independence and enabling aging in place continues to drive the shift away from institutional care toward home and community settings.
• The Japanese government is actively addressing the workforce crisis through wage subsidies, encouraging the development of care robots, and exploring policy reforms. The 2027 reform discussions include expansion of the 20% co-payment category and introduction of user fees for care management. Currently, users cover 10 to 30% of nursing care service fees depending on their income levels, but over 90% (5.41 million people) pay only 10%.

Market Dynamics

Driver: Unprecedented Demographic Aging and Rising Care Dependency Japan is experiencing the most advanced population aging of any major economy, fundamentally reshaping the long-term care landscape. As of September 2025, 36.19 million people were aged 65 and above, representing 29.4% of the total population. This proportion is the highest among countries with more than 40 million people, significantly exceeding Italy (25.1%), Germany (23.7%), and France (22.5%). Women account for 20.51 million of the elderly population, exceeding men by 4.83 million. The 75+ population has reached 17.2% of the total population, far exceeding other nations. The National Institute of Population and Social Security Research projects the senior population will reach 39.28 million by 2040, making up 34.8% of the total. The combination of the aging of the baby boom generation, increasing life expectancy, and declining fertility rates creates sustained and intensifying demand for long-term care services across all settings. The number of individuals requiring care is projected to grow significantly, with nursing care costs projected to reach 27.6 trillion yen by 2040.

Challenge: Severe Workforce Shortages and "Caregiver Crisis" Japan's long-term care market faces a critical workforce shortage that threatens the sustainability of the entire system. According to Ministry of Health, Labour and Welfare estimates, Japan currently requires 2.4 million care workers but faces a shortage of 250,000, which is projected to expand to 570,000 by 2040. The crisis is particularly acute in institutional settings. According to a 2025 survey by the Welfare and Medical Service Agency (WAM) of 3,342 social welfare corporations operating Special Nursing Homes, 64.0% of facilities reported staff shortages, with the average shortage per facility increasing to 5.5 workers, up 1.9 from the previous year. The underlying causes include low wages, physically demanding work, low social recognition of the care profession, and competition from other industries. The financial constraints of the LTCI system limit the government's ability to raise wages significantly. Without aggressive intervention, including higher wages, improved working conditions, and accelerated adoption of care robots and AI, Japan's long-term care system risks significant service disruptions.

Trend: Expansion of Home and Community-Based Care and the Shift from Institutional Care A fundamental shift in long-term care delivery is occurring in Japan, with services increasingly being delivered in home and community settings rather than institutional facilities. As of December 2025, approximately 4.48 million people received home-based care services (home care), with an additional 940,000 receiving community-based services and 970,000 receiving institutional care services. The LTCI system's objective is to support the independence of elderly individuals and enable them to live in their own homes. This trend is driven by multiple factors, including the strong preference of Japanese seniors to age in place, government policies promoting community-based care, and the relative cost-effectiveness of home care compared to institutional care. The growth in community-based services reflects a deliberate policy shift toward integrating medical care and long-term care in community settings. However, the workforce shortage is most acute in the home care sector, with many municipalities reporting a severe shortage of home-visit care providers. The government is responding by promoting care robots, AI, and technology to reduce the physical burden on care workers and increase productivity.

Policies

• The Long-Term Care Insurance system, introduced in April 2000, is the cornerstone of Japan's long-term care financing. The system is based partially on a tax-funded and insurance-based model. Every individual pays a premium to LTCI from the age of 40 onwards, based on income level and residence area. An individual becomes entitled to benefits, including home-based help and nursing facilities, at the age of 65. As of 2024, the number of primary insured persons reached approximately 35.9 million.
• According to the Ministry of Health, Labour and Welfare's "Long-Term Care Insurance Business Status Report (October 2025 provisional)," the number of certified individuals requiring care or support reached 7.354 million, an increase of 138,000 from the previous year. The certification rate among primary insured persons is approximately 20.2%.
• The government has established a three-tier care service structure comprising home-based care services (home care), community-based services, and institutional care facilities. As of December 2025, the Ministry of Health, Labour and Welfare reported that approximately 4.48 million people received home care services, 940,000 received community-based services, and 970,000 received institutional care services.
• The Fiscal System Council, which advises the finance minister, proposed in November 2025 that nursing care service fees be charged to users based on their ability to pay. Currently, users cover 10 to 30% of nursing care service fees depending on their income levels, but over 90% (5.41 million people) pay only 10%. The panel called for expanding the scope of users who pay 20%, while setting a ceiling on their payments.
• The 2025 fiscal year budget for social security reached 39.1 trillion yen, a record high. Nursing care costs are estimated to total 14.3 trillion yen in fiscal 2025, about four times the level in 2000, when the program was established. These costs are projected to reach 27.6 trillion yen in fiscal 2040.
• The government is promoting digital transformation in long-term care, including the adoption of electronic health records, telehealth, remote monitoring, and AI-enabled care management. Care robots and AI are being promoted to reduce the physical burden on care workers and address workforce shortages.

Segment Analysis

Japan Long-Term Care Market By Service Type • Home Healthcare: Home healthcare represents the largest service segment in Japan's long-term care market. According to the Ministry of Health, Labour and Welfare's December 2025 report, approximately 4.48 million people received home-based care services (home care). The home care sector includes home-visit care, home-visit nursing, and day care services. The segment is driven by the LTCI system's objective to support independence and enable aging in place. Home healthcare includes personal care, nursing care, rehabilitation, and support services delivered in the patient's home. The segment faces significant workforce challenges, with many municipalities reporting severe shortages of home-visit care providers.
• Nursing Care / Skilled Nursing Facilities: The nursing facility sector in Japan comprises three main institutional types: Special Nursing Homes for the Elderly (Tokuyo), geriatric health service facilities, and long-term care medical institutions. According to the Ministry of Health, Labour and Welfare's December 2025 report, approximately 970,000 people received institutional care services. Among these, Special Nursing Homes for the Elderly (Tokuyo) served 584,910 residents. Special Nursing Homes for the Elderly have exceptionally high occupancy, reflecting the chronic shortage of institutional beds. The sector provides 24-hour nursing care, medical supervision, and personal assistance for elderly individuals with high care needs. Over 64% of Tokuyo facilities report staff shortages.
• Assisted Living Facilities: Assisted living represents a growing segment in Japan's long-term care market. The segment includes paid elderly homes, group homes for elderly with dementia, and other community-based living arrangements. The assisted living sector is expanding as the government promotes community-based care alternatives to institutional facilities. The segment provides residential care for individuals who require assistance with daily activities but do not need 24-hour nursing care.
• Hospice and Palliative Care: Hospice and palliative care services in Japan are delivered across multiple settings, including homes, nursing homes, hospitals, and specialized palliative care units. The growing prevalence of dementia and chronic conditions among the elderly is driving demand for end-of-life care services. Palliative care is integrated into the broader continuum of long-term care services provided under the LTCI system.
• Other Services: This segment includes day care services, short-term respite care, and community-based support services. According to the Ministry of Health, Labour and Welfare's December 2025 report, approximately 940,000 people received community-based services. Day care services provide social engagement and support for older adults, supporting the preference for home-based care. Respite care services provide temporary relief for family caregivers.

Japan Long-Term Care Market By Payer Type • Public: Public sources are the dominant payer for long-term care services in Japan, primarily through the Long-Term Care Insurance system. The LTCI system has approximately 35.9 million primary insured persons and expenditures of 14.3 trillion yen in fiscal year 2025. The system is financed through a combination of premiums, taxes, and co-payments. Public payers represent both the largest payer segment and the foundation of Japan's long-term care financing system.
• Private: Private sources account for a growing but still limited portion of long-term care spending in Japan. Private long-term care insurance and care-related supplementary insurance products are emerging as growth segments. The private sector includes supplementary insurance products that complement the public LTCI system.
• Out-of-Pocket: Out-of-pocket payments represent a significant component of long-term care spending in Japan. The LTCI system requires co-payments of 10–30% depending on income. Currently, over 90% (5.41 million people) pay only 10%. Discussions are ongoing regarding the expansion of the 20% co-payment category. Out-of-pocket costs vary significantly by service type and income level.

Japan Long-Term Care Market By Gender • Female residents account for the largest share of Japan's long-term care spending, driven by higher life expectancy and higher rates of disability in advanced age. As of September 2025, women accounted for 20.51 million of the elderly population (65+), exceeding men by 4.83 million. Among the 7.354 million certified care recipients as of October 2025, approximately 4.98 million were women and 2.36 million were men. Women are more likely to live alone in old age, increasing their reliance on formal paid care services.
• Male residents account for a smaller but growing share of Japan's long-term care spending. Among certified care recipients, men accounted for 2.36 million out of 7.354 million. Men are more likely to need long-term care at younger ages due to disabilities and chronic conditions. As male life expectancy increases, the representation of men in the older adult cohort is gradually growing.

Japan Long-Term Care Market Economics

• The cost of long-term care services varies significantly by service type, geographic location, and facility type. The LTCI system expenditures reached 14.3 trillion yen in fiscal year 2025, approximately four times the level at the system's inception. These costs are projected to reach 27.6 trillion yen in fiscal 2040.
• Staffing costs represent the largest operating expense for all long-term care providers. The sector faces a severe workforce shortage, with the Ministry of Health, Labour and Welfare estimating a current shortage of 250,000 care workers, projected to expand to 570,000 by 2040. Over 64% of Tokuyo facilities report staff shortages. Low wages and difficult working conditions contribute to high turnover and recruitment challenges.
• The LTCI system is financed through premiums, taxes, and co-payments. The system requires co-payments of 10–30% depending on income. Over 90% (5.41 million people) pay only 10%. Discussions are ongoing regarding the expansion of the 20% co-payment category. The system faces significant financial pressure as the number of certified care recipients continues to grow.
• Out-of-pocket costs represent a substantial burden on households. With co-payments of 10–30% depending on income, out-of-pocket costs vary significantly. The government is considering expanding the 20% co-payment category to increase revenue. The financial burden on households is expected to increase as care costs rise and the population continues to age.
• The economic value of home- and community-based services relative to institutional care is a key policy consideration. Home care is generally less expensive than institutional care on a per-patient basis, and the shift toward home care is expected to continue. With 4.48 million people receiving home-based care services compared to 970,000 receiving institutional care, home care represents the dominant mode of care delivery.


Considered in this report
• Historic Year: 2020
• Base year: 2025
• Estimated year: 2026
• Forecast year: 2031

Aspects covered in this report
• Long-term care Market with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Service Type
• Home Healthcare
• Nursing Care / Skilled Nursing Facilities: 
• Assisted Living Facilities
• Hospice & Palliative Care:
• Other Services

By Payer Type
• Public
• Private
• Out-of-Pocket

By Gender
• Male
• Female