Rethinking medical protection beyond the price tag

 Medical protection needs to remain accessible as people age, when healthcare needs and medical costs may increase.

From Shahrul Khalidi

For many Malaysians, buying medical insurance or takaful starts with a simple question: how much will it cost?

But affordability should not only be measured by the initial cost of a plan. Medical protection also needs to remain accessible as people age, when healthcare needs and medical costs may increase.

This is the thinking behind MediAsas, the Base Medical and Health Insurance/Takaful Plan introduced as part of the RESET strategy. Its design reflects the direction set out in the Medical and Health Insurance/Takaful (MHIT) White Paper – improving access to affordable protection while addressing the longer-term pressures that can make medical coverage harder to sustain.

That means affordability also has to be considered alongside the level of coverage provided. Consumers may naturally associate better medical protection with a higher annual limit. However, while a higher limit can provide richer coverage, it may also result in a higher repricing quantum due to increased utilisation.

The aim, therefore, is not necessarily to provide the highest possible annual limit, but a level of coverage that is adequate for most healthcare needs while remaining sustainable. Ultimately, the most suitable level of coverage depends on an individual’s healthcare needs and financial circumstances.

MediAsas therefore offers two options. MediAsas Teras provides an annual limit of RM100,000 for those aged up to 59 and RM150,000 from age 60, while MediAsas Fleksi provides an annual limit of RM300,000. Neither plan has a lifetime limit.

MediAsas is designed as a base level of medical protection, rather than to offer the highest annual limits or replace existing medical plans. Consumers who need higher limits or broader coverage can consider other commercial insurance and takaful products.

The annual limits for MediAsas is also informed by actual claim patterns. According to the 2024 Insurance Services Malaysia data, 99% of claims paid by insurers and takaful operators were below RM60,000, within the RM100,000 limit.

These claim patterns will continue to be monitored and referenced as part of regular reviews of the annual limits, ensuring that coverage remains relevant, adequate and aligned with utilisation trends.

Balanced approach to cost-sharing

MediAsas incorporates deductibles as a cost-sharing mechanism that encourages healthcare utilisation and helps manage rising healthcare costs, while providing protection against significant medical expenses.

At preferred providers, customers benefit from lower out-of-pocket costs and cashless admission, while cost-sharing is waived in specified circumstances such as treatment at government healthcare facilities.

Separately, MediAsas premiums or contributions are structured according to attained age and may be revised based on medical costs, claims experience and the sustainability of the portfolio. However, these adjustments are not based on an individual’s claims, but on the experience and sustainability of the overall pool.

MediAsas also seeks to improve healthcare cost predictability and efficiency through measures such as Diagnosis-Related Group (DRG)-based payments, where hospitals are paid based on a patient’s condition and the care typically required, rather than for each individual test or procedure.

Additionally, MediAsas introduces a cancer drug list initiative to promote greater transparency and sustainability in cancer treatment costs, a feature not currently adopted across other MHIT products.

Broader access

MediAsas is designed to be more inclusive of individuals with certain stable and well-managed pre-existing conditions. Having a pre-existing condition does not automatically prevent someone from applying, although exclusions or premium loadings may apply following an assessment.

As a fully underwritten product, applicants are required to disclose their health information through health questionnaires. Those with pre-existing conditions may also be asked to provide additional medical evidence to determine the appropriate terms of coverage.

MediAsas sets out 35 major exclusions covering certain conditions and treatments, alongside waiting periods for specified illnesses. These are standard features of insurance products and help keep coverage fair and affordable.

Insurance is designed to protect against future, uncertain risks rather than known conditions. Without appropriate safeguards, individuals could purchase insurance when they already expect to make a claim, potentially increasing premiums for the wider pool.

Understanding the 7-year moratorium

Insurers and takaful operators may investigate potential non-disclosure or misrepresentation when assessing claims, even years after a policy is issued.

MediAsas introduces a seven-year moratorium, or “no-look-back” period. This means that once a person has been continuously covered for seven years, claims can no longer be contested, except in specified circumstances such as fraud, deliberate or reckless non-disclosure, and certain pre-defined medical conditions. This gives policyholders greater peace of mind over their coverage while allowing insurers time to verify the information provided.

The product is currently being piloted ahead of its planned nationwide rollout in January 2027, allowing Bank Negara Malaysia and the insurance and takaful industry to address implementation issues and refine the product.

Affordable medical protection depends on how healthcare is delivered, priced and financed, as well as how insurance and takaful products are designed.

For consumers, the question should go beyond “How much coverage can I get today?”

It should also be: “Can I continue to afford this protection as I get older?” - FMT

Shahrul Khalidi is an industry analyst and an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of  MMKtT.