Deductible vs Co-Insurance Plans in Malaysia 2024

Recently, it went viral on the X app (or Twitter) because many were surprised that policyholders had to make upfront payments to receive treatment at private hospitals despite having medical insurance. Additional payments known as deductible vs. co-insurance have long been imposed on health insurance policyholders.

What You Need to Know About Deductible vs Co-Insurance in Health Insurance Policies

Many still do not know or are confused about deductible vs co-insurance. This article will help you understand deductible and co-insurance in medical insurance better.

What is a Deductible in Health Insurance?

A deductible refers to an amount that policyholders must pay before they can make claims from the insurance company. In other words, policyholders need to pay a specific amount of money while the remaining treatment costs will be covered by the insurance company.

The deductible amount is fixed and must be paid by the policyholder before receiving treatment or before being admitted to the hospital. Deductibles are typically set per admission (each time you are hospitalized) or per year (one payment for the entire year). You can refer to your health insurance policy if you are unsure about the deductible amount.

Example Calculation of Deductible

A policyholder is admitted to the hospital and the hospital treatment costs amount to RM20,000. According to his health insurance policy terms, the deductible is set at RM500.

Before being admitted to the hospital, he needs to make a deductible payment of RM500. The insurance company will cover the remaining balance of RM19,500.

If the deductible is on a yearly basis, subsequent hospital admissions within the same year do not require payment. The insurance company will cover the payments for subsequent admissions.

However, if the deductible is per admission, you are subject to an upfront payment of RM500 each time you are admitted to the hospital.

The function of a deductible is to prevent misuse of medical cards or invalid medical insurance claims. It discourages claiming for minor treatment costs that could be obtained at a regular clinic. Deductibles are imposed to make policyholders more responsible and cautious before making claims when deductibles are applied.

For example, it’s more cost-effective to visit a regular clinic for a fever treatment costing RM100 rather than paying a RM500 deductible for hospital admission.

Additionally, deductibles can reduce monthly or annual insurance premiums. In other words, insurance premiums with deductibles are lower compared to those without deductibles.

What is Co-Insurance in Health and Medical Insurance?

Co-insurance refers to the cost-sharing arrangement between the policyholder and the insurance company. Both parties agree to bear a portion of the medical costs according to a predetermined percentage. For example, an agreed co-insurance percentage might be 80:20 depending on the insurance company.

The insurance company agrees to cover 80 percent of the medical costs, while the remaining 20 percent must be borne or paid by the policyholder. Co-takaful offers a similar concept to co-insurance.

Example Calculation of Co-Insurance

The policyholder underwent an appendectomy in the hospital, incurring medical costs amounting to RM20,000. According to the insurance policy terms, the policyholder is subject to a deductible payment of RM500 and a co-insurance percentage of 80:20.

Firstly, he needs to pay the deductible of RM500 before receiving treatment. Additionally, he must bear a portion of the medical costs according to the agreed co-insurance percentage of 20 percent. Assuming:

Medical Costs RM20,000 – Deductible RM500 = RM19,500
Co-Insurance Percentage 20% x RM19,500 = RM3,900

In addition to the deductible of RM500, he needs to cover an additional RM3,900 for co-insurance. The remaining balance of RM15,600 will be covered by the insurance company.

Similar to deductibles, co-insurance or co-takaful aims to prevent misuse by policyholders. Since there is a percentage that policyholders must bear themselves, policyholders tend to be more cautious when making medical insurance claims.

Advantages and Disadvantages of Deductible vs Co-Insurance

Here are the advantages and disadvantages of deductible and co-insurance in Malaysia:

Deductible vs Co-Insurance: Which is the Better Choice?

In essence, deductibles refer to a fixed amount that must be paid upfront before receiving treatment, regardless of the total eligible benefit amount. On the other hand, co-insurance involves sharing the cost of medical expenses between the policyholder and the insurance company, based on a predetermined percentage.

If you opt for health insurance that imposes deductibles, the amount you need to pay remains constant and does not change. Conversely, with co-insurance, the amount you need to pay varies depending on the agreed percentage and the total cost of the treatment.

What’s important is to choose any health insurance, whether it’s with deductibles, co-insurance, or not, that aligns with your current financial status. You can opt to pay higher monthly premiums without worrying about additional costs later on. Alternatively, you can choose to pay lower monthly premiums and save some money for preparation in case of hospitalization.

For more information on deductible vs co-insurance plans, visit the Qoala website for further details. Qoala offers free insurance comparison services. Get the best deductible and co-insurance health insurance plans at Qoala today.