Starting September 1, 2024, Malaysians will have new choices in medical insurance. They can opt for new, more affordable insurance products with co-payment requirements, or stick with existing plans that cover the full cost of medical bills but come with higher premiums. This change stems from directives by Bank Negara Malaysia (BNM), aimed at providing consumers with more options and controlling medical cost inflation.
Key Changes and Their Impact:
- Introduction of Co-Payment Options
From September 1, 2024, all insurance and takaful companies in Malaysia must offer at least one medical insurance policy featuring co-payment. This means that policyholders will share the cost of their medical bills with the insurer. Companies are also required to provide a range of co-payment options to cater to different financial needs. If a company currently lacks such a product, it must develop one that meets BNM’s minimum co-payment standards.
- Understanding Co-Payment
Co-payment involves either a percentage of the total medical bill (co-insurance) or a fixed amount (deductible) that the policyholder must pay before the insurer covers the remaining costs. The minimum co-payment amount set by BNM is either 5% of the total hospital bill, subject to a maximum limit decided by the insurance company, or a deductible of RM500.
- Rationale Behind the Changes
BNM’s decision to implement a minimum co-payment amount is based on a mix of factors, including the structure of existing co-payment products in Malaysia, the income levels of Malaysians, current economic conditions, and the experiences of other countries with similar requirements. This measure aims to make medical insurance more affordable and to promote responsible use of healthcare services.
- Exceptions and Special Considerations
Certain situations will be exempt from the co-payment requirement, including emergency treatments, outpatient follow-up treatments for critical illnesses like cancer or kidney dialysis, and treatments at government healthcare facilities. If an insurance company wishes to expand these exemptions, it must seek BNM’s approval.
In cases where policyholders face financial difficulties, insurance companies have the discretion to waive the co-payment requirement, based on their internal policies and governance.
- Future of Insurance Products
All new medical insurance products introduced after June 1, 2024, must include a co-payment feature. This policy ensures that new offerings align with BNM’s goal of balancing affordability and responsible healthcare usage. Licensed insurance and takaful operators are no longer permitted to design new products without the minimum co-payment feature, nor can they offer add-ons to eliminate this co-payment requirement.
- Maintaining Existing Policies
Current policyholders who prefer their insurance plans without co-payment features can continue to renew them. Additionally, insurance companies may still offer these existing products to new customers, unless they choose to discontinue them.
- Transparency and Consumer Choice
From January 1, 2025, insurance companies must provide a detailed product disclosure sheet for medical insurance products, formatted according to BNM’s specifications. This document, limited to 2.5 A4 pages, will include a Product Options Table that highlights insurance plans with co-payment features, among other criteria. This transparency is intended to help consumers make informed decisions based on their financial circumstances and healthcare needs.
- Benefits and Potential Drawbacks
According to BNM, medical insurance policies with co-payment features can have premiums that are 19% to 68% cheaper than similar products without such features. This offers consumers more affordable options and encourages active participation in healthcare decisions. The co-payment requirement is also expected to curb fraudulent claims and control medical cost inflation, which has been a significant issue in Malaysia.
- Addressing Medical Inflation
Malaysia experienced a 12.6% increase in medical costs in 2023, significantly higher than the global average of 5.6%. Factors contributing to this include higher charges by healthcare providers for insured patients and the so-called "buffet syndrome," where patients overuse medical services to maximize their insurance benefits. This behavior drives up medical costs and insurance premiums, making medical insurance less accessible for some groups.
BNM’s data indicates that hospital supplies and services constitute the largest portion of medical claims costs. This is linked to drug prices, advancements in medical technology, and increased use of healthcare services post-COVID-19.
The introduction of co-payment features in medical insurance is a significant change aimed at making healthcare more affordable and promoting responsible usage. While it offers the benefit of lower premiums, consumers will need to weigh this against the potential out-of-pocket expenses. The new policies and transparency requirements set by BNM are designed to empower consumers to make well-informed decisions about their healthcare coverage.
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