KUALA LUMPUR (July 12): The new co-payment feature for medical and health insurance and takaful (MHIT) products is among options offered to new consumers with lower premiums, offering flexibility based on the consumers’ financial needs.

Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O’Dell said the co-payment option is not compulsory, and does not affect existing consumers who have already purchased full coverage MHIT plans.

“Co-payment allows insurance and takaful operators to offer lower premiums, whereby consumers can save up between 19% and 68% because the policy and certificate holders are sharing the cost of medical services.

“However, customers can still decide whether to purchase a policy with co-payment or without co-payment at higher premiums,” he told Bernama.

Starting Sept 1, 2024, Bank Negara Malaysia (BNM) has required insurers and takaful operators (ITOs) to provide an option for MHIT products with a co-payment feature.

Thus, the ITOs are required to show a product disclosure sheet with at least one option that has a co-payment feature to the customers, starting Jan 1, 2025.

O’Dell emphasised that the co-payment feature is not new to the Malaysian market, noting that some ITOs in Malaysia had previously provided co-payment options in their products.

Hence, he said increasing the adoption of co-payment MHIT products is expected to help curb overconsumption of health services and control medical cost inflation, which has risen by 36.3% cumulatively from 2020 to 2022.

Meanwhile, it was reported that Malaysia’s medical cost inflation was 12.6% in 2023, significantly higher than the global average of 5.6%, and among the highest in the Asia-Pacific region. 

Co-payment involves sharing the cost between policy or certificate holders and ITOs, wherein both parties split the cost of medical services through co-insurance or deductibles.

For co-insurance, the consumers need to pay a percentage of the medical expenses, while the insurance /takaful plan covers the remaining amount. The minimum amount is 5% of total hospital bills.

For deductibles - the insured person has to pay a minimum amount of RM500 from the total hospital bill.

O’Dell said there are also MHIT products that include both co-insurance and deductibles for consumers, especially for individuals or families with limited budgets.

However, he said the co-payment feature will not apply in some situations, such as emergency treatment (including accident cases), outpatient treatment for follow-up treatments due to critical illnesses, and treatment at a government healthcare facility.

The ITOs may also give due consideration to any financial hardships or extenuating circumstances faced by a policyholder/takaful participant, and may apply its discretion to waive co-payments in such circumstances. 

O’Dell said the take-up rate for life insurance, takaful and general insurance industry in the first half of 2024 remained strong, due to higher demand for the products amid some repricing on medical protection plans.

He expects a gradual take-up of co-payment MHIT products after the central bank requires all ITOs to include the cost-sharing features as an option for consumers, which is more sustainable in the long run.

“By having this feature, customers would be encouraged to take a more active role in using healthcare services, help promote more responsible use of healthcare, reduce fraudulent medical claims, and ensure that medical insurance and takaful remains affordable for Malaysians,” he said.

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