BNM Introduces Co-Payment Options to Combat Rising Medical Costs in Malaysia

Bank Negara Malaysia has mandated that, starting September 2024, insurance and takaful operators must offer medical and health insurance products with a co-payment option to address rising medical cost inflation. The policy aims to make insurance more affordable while controlling health service overuse, with exemptions for emergency and critical illness treatments.


9 July 2024 – Bank Negara Malaysia (BNM) has issued a clarification regarding recent discussions about the implementation of co-payment requirements for medical and health insurance and takaful (MHIT) products. The newly introduced Policy Document on Medical and Health Insurance/Takaful Business aims to foster more sustainable and affordable MHIT options in response to the rising medical cost inflation in Malaysia, which reached 12.6% in 2023, compared to the global average of 5.6%.

Starting from September 1, 2024, insurance and takaful operators (ITOs) will be required to provide consumers with an option to purchase MHIT products that include a co-payment feature. However, existing policyholders can continue with their current non-co-payment plans upon renewal. ITOs are also permitted to offer new MHIT products without co-payment features.

The introduction of co-payment options allows consumers to select lower-cost MHIT products tailored to their financial situations and needs. Notably, MHIT products with co-payment features are already present in the Malaysian market, typically offering premiums or contributions that are 19% to 68% lower than their non-co-payment counterparts, depending on the co-payment level. ITOs are expected to provide a variety of co-payment levels to meet diverse consumer financial needs, with maximum caps in place to limit the expenses borne by policyholders or takaful participants.

To enhance affordability and protect consumer interests, the Policy Document includes specific exemptions from co-payments. These exemptions cover emergency treatments, follow-up outpatient treatments for critical illnesses such as cancer or kidney dialysis, and treatments sought at Government healthcare facilities. Additionally, ITOs are urged to consider waiving co-payments for policyholders or takaful participants facing financial hardship or other extenuating circumstances.

The policy aims to curb medical cost inflation in Malaysia by encouraging the adoption of co-payment MHIT products, which helps control the overuse of health services. This initiative is part of broader healthcare reforms outlined in the Government’s Health White Paper, which also seeks to enhance transparency in medical costs and transform health service delivery. A collective national effort is deemed essential to tackle medical cost inflation effectively across the healthcare value chain.

Author: Terry KS

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