KUALA LUMPUR, August 26 — Insurance companies are set to introduce copayments of up to 20% for their new medical and health insurance products (MHIT), in line with Bank Negara Malaysia’s (BNM) mandate for insurers to have at least one copay product.
Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O’Dell said that insurers are considering copayments rates between 5 per cent and 20 per cent, with 5 per cent being the most common and acceptable rate.
The caps on expenses used to calculate the copayment will mostly range from RM10,000 to RM20,000. This means the copayment is based on a percentage of this capped amount, not the total out-of-pocket (OOP) cost.
For example, if there is a cap of RM20,000 and a 5 per cent copayment rate, the payment would be 5 per cent of RM20,000, or RM1,000.
“We did a preliminary survey, but we’ll have more information after September 1, when all the plans will be available. In our survey, we asked them (our members) specifically about some of the features of their plans, and they all had caps,” O’Dell told CodeBlue in an interview here last August 16.
“Most of the caps range from RM10,000 to RM20,000 – this is the amount that the coinsurance applies to, not the total OOP cost.
“The copayment percentage can vary too. It can be from 5 per cent to 20 per cent, is what I’ve seen. I haven’t seen anything higher than 20 per cent, with 5 per cent being the most common. About 80 per cent of plans have 5 per cent copayment, though there are some with a 20 per cent rate.”
He compared this to the United States, where copayments range from 10 per cent to 20 per cent, but are capped at around US$5,000 (RM21,890) to US$10,000 (RM43,787).
CodeBlue asked if OOP copayments could reach five figures, like RM20,000 to RM40,000. It has been argued that while those with private health insurance might manage copayments of RM5,000 to RM8,000, higher amounts could be challenging for middle-income individuals or families, underscoring the need for a cap.
“I think you’ll see very few plans with that kind of exposure,” O’Dell said. “Most customers won’t want that kind of exposure. There may be a few who are willing to, say, take a 50 per cent reduction in premiums for such exposure, but these will be a small minority.
“These types of plans are likely to attract those who could almost self-pay, but want to protect themselves against very high medical bills, like a quarter million or half a million dollars.”
When asked if copayment rates could be adjusted like premiums, O’Dell said no, unless the policyholder agrees to the change. “Any adjustment to the copayment rate must be agreed upon by the policyholder.”
O’Dell said that the absence of a BNM cap on copayments will allow insurers to offer a range of plans to meet various needs.
“From our surveys, we know that all of our members’ plans include caps. Not having a defined cap (from Bank Negara) allows insurers to create diverse plans tailored to different needs and financial situations.
“For example, someone in the T20 group might accept a RM10,000 deductible to cover major costs, as that amount may not be considered a major burden for them. Someone else might prefer a plan with a lower RM500 deductible to minimise risk.
“Some of our members are coming out with just a deductible plan with no coinsurance, so it will only limit the OOP cost to RM500.
“I think it leaves room for more innovation and more choices to fit customers’ needs. Ultimately, the market will determine what consumers value most.
“My guess is a popular plan will be a RM500 deductible only or a RM500 deductible with 5 per cent (copay) up to RM10,000, so that it limits the exposure but yet it puts some skin in the game, if you will, from the policyholder,” O’Dell said.
