KUALA LUMPUR, Feb 2 — The Galen Centre for Health and Social Policy has rejected a government proposal to allow Employees’ Provident Fund (EPF) retirement savings to be used to pay for the Base Medical and Health Insurance/Takaful (MHIT) Plan.
In a strongly worded statement, Galen Centre chief executive Azrul Mohd Khalib said this would further weaken retirement security and widen inequity, especially when 33 per cent of EPF contributors had less than RM10,000 in their savings as of August 2024.
“The EPF is meant to protect Malaysians from poverty in old age. It should not be treated as a convenient funding tap for a health care financing experiment,” said Azrul today.
“Using EPF savings to pay for MHIT premiums is a sticking plaster action that creates a bigger long-term problem.
“Retirement savings are meant to safeguard dignity and security later in life. Diverting them to monthly or annual premiums risks leaving members exposed at the point they most need financial protection.”
Finance Minister II Amir Hamzah Azizan told the Dewan Rakyat last Thursday that the government was in discussions with EPF to allow contributors to use their retirement savings in Account 2 Sejahtera to pay for the Base MHIT.
Malaysians widely condemned the proposal on social media platform X, as many said EPF should be used for retirement instead of benefiting private insurance companies.
“Don’t let your 30 years of labor become a guaranteed revenue stream for greedy insurance companies,” one tweeted. “Resist at all costs, people.”
Parti Sosialis Malaysia’s (PSM) Gombak chapter described the proposal as “one of the most disgusting ideas” that has come out from the Madani government. “This drains EPF and puts money into insurance companies’ pockets for bigger profits. Help our doctors, not these companies!”
Another said the government should be focusing on slashing private health care costs and curbing health insurance premium hikes instead.
The Galen Centre pointed out that the i-Lestari, i-Sinar and i-Citra EPF withdrawals over the past few years have resulted in a larger proportion of low income earners with low EPF savings and not having enough for retirement.
“Using EPF’s Account 2 to pay for monthly premiums risks compounding this vulnerability,” said Azrul.
He noted that Base MHIT premiums will also rise over time, even though the government-designed product is positioned as a “basic” plan, with limits and exclusions to its benefits.
“Its copayments and deductibles can still leave families facing significant out-of-pocket costs during serious illness. In practice, EPF-funded premiums could provide the appearance of protection while increasing household financial vulnerability in both the near and long term.”
Although Bank Negara Malaysia’s (BNM) White Paper promises “greater premium stability” with the Base MHIT Plan, the document explicitly states that premiums will be subject to repricing based on the claims experience of the risk pool, medical inflation, and any revision to benefits covered.
The Base MHIT Plan does not cover pre-existing conditions either, as the product will be risk-rated based on an individual’s age, gender, and health status. Neither is the central bank guaranteeing claim payouts; existing insurance and takaful operators (ITOs) are expected to underwrite the Base MHIT Plan, not the government.
“The fundamental challenge is not that Malaysians lack a way to pay premiums. It is that health care costs and medical inflation continue to rise, and the system remains fragmented across public and private sectors. Insurance and takaful premium do not exist in a vacuum,” said Azrul.
“Without stronger cost controls to work in tandem such as the Diagnosis-Related Groups (DRGs), transparency, and better purchasing and payment reforms, the base MHIT product risks becoming another layer of financing pressure rather than a durable solution.
“Malaysia needs sustainable health financing and serious cost control. We should not solve health care affordability by undermining retirement security.”
In an editorial last Saturday, the New Straits Times noted that more and more Malaysians are finding it hard to retire, quoting a Sun Life survey that found 63 per cent expect to keep working beyond retirement age.
Under the Base MHIT Plan’s Standard Plan with RM150,000 annual limit, those aged 61 to 65 face monthly premiums of RM280 to RM350, or annual premiums of RM3,360 to RM4,200, with a deductible of RM1,000 per disability.
For those aged above 75 years, premiums rise to RM500 to RM780 a month (or RM6,000 to RM9,360 a year). Lower premiums are only possible under the Standard-Plus Plan with RM300,000 annual cover that come with hefty deductibles of RM10,000 to RM15,000.
Deductibles are the amount that a policyholder must pay upfront before coverage begins. Without any explanation, BNM’s White Paper omits indicative target premiums for those aged between 36 and 60 years, 66 to 75 years, and young adults aged below 31 years.
