Co-payment enhances flexibility, transparency in medical insurance - LIAM

KOTA KINABALU - The new regulation on co-payment requirements for medical, health insurance, and takaful (MHIT) products aims to offer consumers greater flexibility, transparency, and lower premiums.

The new regulation by Bank Negara Malaysia (BNM), effective Sept 1, 2024, has sparked some confusion but industry leaders are working to clear things up.

Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O'Dell addressed concerns about the new co-payment regulation, emphasising that co-payments are not a new concept.

"Co-payments have been part of insurance policies for a long time. The new regulation is meant to expand consumer choices, not impose mandatory costs,” he told Bernama in a recent interview.

He said that under the new guidelines, insurers are required to present at least one co-payment option alongside their existing plans.

O'Dell explained that the change is intended to provide consumers with the choice of lower premiums in exchange for sharing a portion of their medical costs.

"The regulation mandates that insurers offer co-payment options and inform consumers about them. It is about giving people more choices, similar to selecting between a budget airline and a premium one for travel,” he said.

One of the major concerns raised is the perceived lack of a cap on the five per cent co-payment option. Some fear that without a cap, they could face prohibitive costs.

However, O'Dell clarified that insurance companies under LIAM will implement caps on co-payments.

He said that the five per cent rate, for example, may apply only to the first RM10,000 or RM15,000 of medical expenses depending on the company.

"Our members have established caps to prevent financial strain on consumers. The goal is to make insurance more affordable while encouraging smart consumer behaviour,” O'Dell noted.

The new regulation includes provisions to protect consumers from financial strain in emergencies and for critical treatments.

Co-payments will be waived for emergency care, follow-up treatments for severe illnesses like cancer or dialysis, and treatment at government healthcare facilities.

"These exemptions ensure that essential and life-threatening care remains accessible without additional costs to patients,” he said.

O'Dell assured that despite concerns about potential impacts on insurance companies, the introduction of co-payment options is expected to have a positive effect.

"While some companies have experienced losses, the co-payment model is a strategic tool to attract customers and offer them lower premiums.

"By expanding insurance coverage and options, we can reach more people and provide valuable services at more affordable rates,” he said.

The co-payment regulation also encourages consumers to be more engaged with their healthcare costs and to ensure transparency in billing.

"We want consumers to question their medical bills to avoid overcharges and unnecessary treatments. This scrutiny benefits both the consumer and the healthcare system,” O'Dell added.

As the industry prepares for the implementation of these new regulations, stakeholders are focusing on educating consumers to ensure a smooth transition and to maximise the benefits of the new co-payment options. - BERNAMA