Co-Insurance in Malaysian Medical Cards: What Do You Actually Pay When You Claim?

Introduction

You have paid your medical insurance premium every month. Then, when you are admitted to hospital, you are told that you still need to pay part of the bill.

It is understandable that your first reaction may be:

This is the main reason co-insurance is often unpopular. It appears to weaken the promise people associate with a medical card: enter the hospital, present the card and let the insurer settle the bill.

However, the real answer is more complicated. A co-insurance plan may cost less to maintain and could help control long-term medical insurance costs. Whether it is suitable depends heavily on its percentage, maximum cap and the amount you can comfortably keep aside for a medical emergency.

Most importantly, a 5% co-insurance clause does not always mean paying 5% of an enormous hospital bill without limit. Some plans place a maximum cap on the amount you bear. Others may impose a much higher cap, a deductible, or both.

Let us examine what co-insurance means, how Malaysians generally perceive it and what actually happens when a claim is made.

What is co-insurance?

Co-insurance is a cost-sharing arrangement between you and your insurer or takaful operator.

If your medical plan has 5% co-insurance, you are responsible for 5% of the eligible medical expenses while the insurer pays the remaining eligible amount, subject to the terms and limits of your policy.

The words eligible medical expenses are important. Co-insurance is normally calculated on expenses accepted as claimable under the policy—not necessarily every ringgit shown on the hospital’s original bill.

For example:

Eligible medical expenses: RM10,000

Co-insurance: 5%

Your co-insurance portion: RM500

Insurer’s portion: RM9,500

If the plan caps your co-insurance at RM1,000 per policy year, your co-insurance contribution should not continue increasing beyond that annual cap once it has been reached. The precise calculation will always depend on the policy wording.

Co-insurance, co-payment and deductible are not exactly the same

These expressions are sometimes used as though they mean the same thing, but there are differences.

A medical plan could contain co-insurance, a deductible, or a combination of both.

For example, a RM500 deductible means that you first bear RM500 of the eligible claim. If co-insurance also applies, the remaining calculation will follow the particular policy’s terms. Do not assume that every insurer calculates combined cost-sharing features in exactly the same way.

Why was co-payment introduced more widely in Malaysia?

Bank Negara Malaysia’s revised requirements took effect against the backdrop of rapidly rising private healthcare and medical insurance costs.

From 1 September 2024, insurers and takaful operators were required to offer consumers an option to purchase Medical and Health Insurance/Takaful products with a co-payment feature. For newly designed medical reimbursement products, the regulatory minimum generally involves at least 5% co-insurance and/or a deductible of at least RM500.

This did not mean every existing medical card without co-payment was automatically converted into a co-payment plan. Bank Negara clarified that consumers who had already purchased products without co-payment could continue with their existing products at renewal, subject to their policy terms. Insurers could also continue offering certain existing non-co-payment products.

According to Bank Negara, medical plans with co-payment features were observed to have premiums or contributions between 19% and 68% lower than comparable products without co-payment, depending on the chosen cost-sharing level. This is an industry observation—not a guaranteed saving for every customer or every product.

The intended objectives include:

• Making lower-cost medical protection available
• Encouraging more careful use of private healthcare services
• Reducing unnecessary utilisation; and
• Supporting the longer-term sustainability of medical insurance

Do people like co-insurance?

Generally, people do not love the idea.

The initial public reaction has often been negative because policyholders feel they are being asked to pay twice: once through regular premiums and again when they are sick.

Common concerns include:

• “Why am I still paying when I already bought insurance?”
• “What if 5% of my hospital bill is RM20,000?”
• “Patients do not control what hospitals charge.”
• “Will insurers eventually make non-co-payment plans unaffordable?”
• “Will I delay treatment because I am worried about paying?”

Healthcare policy commentators have also questioned whether too much responsibility is being placed on patients, who usually have the least bargaining power over hospital prices, doctor recommendations and treatment decisions.

At the same time, some consumers see a capped co-payment plan as a reasonable trade-off. They may prefer paying a lower ongoing insurance cost while keeping a defined amount of emergency savings for future claims.

This means public acceptance usually depends on three questions:

• What is the co-insurance percentage?
• What is the maximum amount the customer may bear?
• How much does the customer genuinely save in return?

A 5% co-insurance capped at RM1,000 per policy year is very different from an uncapped 10% co-insurance or a plan with a RM20,000 maximum.

It is also important to be careful when describing “general public perception.” Online comments and news reactions show genuine concerns, but there is currently limited published Malaysian survey data measuring policyholders’ satisfaction specifically with co-insurance after making a claim.

What actually happens when you make a claim?

The existence of co-insurance does not normally cause a valid claim to be rejected. It affects how an approved medical claim is divided between you and the insurer.

A useful general formula is:

A realistic claim example

Imagine the following situation:

Total hospital bill: RM50,000

Expenses accepted as eligible: RM48,000

Non-covered expenses: RM2,000

Co-insurance: 5%

Maximum co-insurance: RM1,000 per policy year

The calculation would look like this:

The customer does not pay RM2,400 in co-insurance because the example plan caps it at RM1,000. However, the RM2,000 of non-covered expenses remains the customer’s responsibility.

Therefore:

A RM1,000 co-insurance cap is not necessarily a RM1,000 cap on everything you might pay at the hospital.

This is one of the most important points for customers to understand.

What if you are admitted again?

If the maximum co-insurance is calculated per policy year and you have already reached it, a subsequent eligible claim within the same policy year may not require further co-insurance.

You may still need to pay for:

• Non-covered items
• Expenses exceeding benefit limits
• Room upgrades
• Charges exceeding reasonable and customary rates; or
• Treatments excluded under the policy

Some plans calculate the cap per claim, per disability or per policy year. Always check which one applies.

What happens during admission and discharge?

At a panel hospital

The typical cashless admission process is:

• You present your medical card at the hospital
• The hospital may collect an admission deposit
• The hospital requests an initial Guarantee Letter from the insurer
• The insurer assesses whether the admission and treatment fall within your coverage
• At discharge, the hospital submits the final itemised bill
• The insurer issues its final approval for eligible expenses
• You pay the co-insurance, deductible and other non-covered charges
• The hospital refunds or adjusts the deposit according to the final bill

Even with a Guarantee Letter, discharge may take several hours because the hospital and insurer must finalise the bill and determine which expenses are covered.

At a non-panel hospital

You may need to pay the complete hospital bill first and apply for reimbursement afterwards.

The insurer will then assess the claim and reimburse the approved amount after applying:

• Co-insurance or deductible
• Policy limits
• Exclusions
• Reasonable and customary charge provisions; and
• Other applicable policy conditions

This creates a much larger temporary cash-flow burden, even if your eventual co-insurance contribution is relatively small.

When should co-payment not apply?

Under Bank Negara Malaysia’s minimum requirements, the co-payment feature should not apply in the following circumstances:

• Emergency treatment, including accident cases
• Outpatient follow-up treatment arising from critical illnesses, such as cancer treatment and kidney dialysis; and
• Treatment obtained at a government healthcare facility

Insurers and takaful operators may also consider financial hardship or exceptional circumstances when deciding whether to waive co-payment, subject to their internal governance and procedures.

Individual products may provide additional exceptions. Customers should refer to the product disclosure sheet and policy contract rather than relying only on a general explanation.

The largest claim surprise may not be co-insurance

When a customer receives an unexpected hospital balance, co-insurance is only one possible reason.

Other common reasons include:

• The treatment was not considered medically necessary
• The condition falls within a waiting period
• A pre-existing condition or non-disclosure issue is discovered
• Certain medical supplies or administrative expenses are excluded
• The admission could have been treated as an outpatient procedure
• The chosen room exceeds the Room and Board entitlement
• Charges exceed reasonable and customary rates
• The annual or lifetime benefit limit has been reached; or
• The treatment is outside the policy’s scope of coverage

Co-insurance answers the question:

It does not answer the separate question:

Customers should understand both.

Can co-insurance control medical inflation?

There is a reasonable argument that small-scale cost sharing can discourage unnecessary hospital admissions or overly expensive treatment choices. When every covered service appears to be free at the point of use, neither the patient nor the healthcare provider has a strong reason to consider cost.

However, co-insurance is not a complete solution.

That does not mean policyholders alone caused medical inflation. Utilisation includes the number, type, setting and intensity of services delivered. Healthcare providers, hospital pricing, treatment practices, insurers, an ageing population and changing patterns of illness all play a part.

Co-insurance may encourage patients to ask more questions, but patients cannot realistically negotiate every charge while facing an illness or emergency. Wider reforms involving price transparency, clinical guidelines, provider payment methods and claims data are also necessary.

Is a co-insurance medical card good or bad?

It is neither automatically good nor automatically bad. It is a financial trade-off.

A co-insurance plan may be suitable if:

• The premium or insurance charge saving is meaningful
• The maximum co-insurance is clearly capped
• You have sufficient emergency savings
• You understand what expenses are not covered; and
• The plan remains sustainable for your long-term budget

It may be less suitable if:

• The co-insurance is uncapped or has a very high maximum
• You have limited emergency savings
• You expect frequent hospital treatment
• The premium saving is small; or
• You are uncomfortable with unpredictable out-of-pocket expenses

The goal is not simply to find the cheapest medical card. It is to choose a plan you can continue paying for while also being able to meet your share of the cost when treatment is needed.

Questions to ask before choosing a co-insurance plan

Before purchasing or changing a medical plan, ask:

• Is the co-insurance calculated on the total hospital bill or eligible expenses?
• What percentage do I need to pay?
• Is there a maximum cap?
• Is the cap per claim, per disability or per policy year?
• Is there also a deductible?
• Which treatments are exempt from co-payment?
• Does room upgrading create additional co-insurance or penalties?
• What expenses are commonly not covered?
• How much do I actually save compared with a similar non-co-payment plan?
• What amount should I maintain as emergency medical savings?

Ask your agent or insurer to show the answers in writing using the product disclosure sheet, benefit schedule and policy wording.

The bottom line

Most people dislike co-insurance because it introduces an expense at the exact moment they expected their medical card to protect them from paying.

Nevertheless, a low and properly capped co-insurance arrangement can be manageable—especially when it produces meaningful cost savings and the customer keeps an appropriate medical emergency fund.

The greatest danger is not co-insurance itself. It is buying a plan without understanding the maximum amount you may bear and assuming the co-insurance cap covers every possible hospital expense.

Before deciding, compare the long-term insurance cost, the co-insurance cap, the policy benefits and your own ability to pay during a claim. Medical coverage should be affordable both before you become sick and when you need to use it.

Sources and further reading

• Bank Negara Malaysia, Implementation of Co-Payment Requirements for Medical and Health Insurance and Takaful Products, 6 July 2024
• Bank Negara Malaysia, Policy Document on Medical and Health Insurance/Takaful Business, 29 February 2024
• Bank Negara Malaysia, How Do I Choose Medical and Health Insurance/Takaful?, 18 June 2025
• Allianz Malaysia, HealthAssured Product Brochure, April 2026. This is included as an example of how a current capped co-insurance product may operate; product terms differ across insurers and plans
• Allianz Malaysia, Individual Medical Claim and Medical Card Process