Foreign residents in Japan face significant changes to healthcare costs starting in 2025, as the government implements sweeping reforms affecting medical fees, prescription drugs, and high-cost treatment coverage. Understanding these changes is essential for budgeting and healthcare planning in the coming year. On December 24, the Japanese government announced a 2.22% overall increase in medical service fees (診療報酬) for fiscal year 2025, according to NHK. This adjustment represents the largest component of rising healthcare costs, with the "main body" portion—covering healthcare worker salaries and operational expenses—increasing by 3.09%. While drug prices will decrease by 0.87%, the net effect means higher costs for medical consultations, procedures, and hospital stays. This increase aims to address rising inflation and improve compensation for medical professionals, but it will directly impact what patients pay at clinics and hospitals. The government simultaneously decided to raise nursing care service fees by 2.03% temporarily, targeting salary increases of up to 19,000 yen per month for care workers. While this primarily affects elderly care facilities rather than general medical services, it reflects the broader trend of increasing healthcare sector costs to address severe workforce shortages. A significant new development affects prescription medications. Starting in 2025, the Ministry of Health, Labour and Welfare will implement special surcharges on approximately 1,100 over-the-counter (OTC) equivalent drugs covering 77 active ingredients. These "OTC類似薬" are prescription medications with similar components and effects to drugs available without prescription at pharmacies. The surcharge system targets commonly prescribed items like Hirudoid gel, a popular moisturizer. When doctors prescribe these medications, patients will pay additional fees beyond standard co-payments. This policy aims to discourage unnecessary prescription of drugs that patients could purchase directly, reducing strain on the national health insurance system. For expats with chronic conditions or facing expensive treatments, changes to the High-Cost Medical Expense System (高額療養費制度) carry particular importance. According to NHK, from August 2025, the government will raise monthly out-of-pocket maximums based on income levels. Additionally, authorities will introduce annual caps for the first time. This system protects patients from catastrophic medical bills by limiting how much they pay regardless of total treatment costs. While the reforms increase limits for higher earners, they maintain protection for those with serious illnesses requiring extended treatment. These changes reflect Japan's struggle to maintain its universal healthcare system amid an aging population and rising costs. The country's national health insurance covers approximately 70% of medical expenses for most working-age adults, with patients paying 30% at the point of service. However, these reforms adjust both the underlying fee structure and out-of-pocket limits. For foreign residents, practical implications include budgeting for higher clinic and hospital bills starting in April 2025 when the new medical fee schedule takes effect. Those regularly receiving prescriptions for medications similar to OTC drugs should consult their doctors about alternatives or consider purchasing directly from pharmacies if appropriate. Expats with high medical expenses should review their finances ahead of August 2025 when new caps take effect, particularly if household income places them in higher brackets. Japan's healthcare system remains affordable compared to many countries, and these adjustments help ensure its sustainability. However, staying informed about changes helps foreign residents plan accordingly and make cost-effective healthcare decisions. Expats should verify their insurance coverage, understand their income bracket for calculating caps, and discuss medication options with healthcare providers to navigate these reforms effectively.