Thinking about getting yourself and your loved ones the much talked about medical card but just not enthusiastic enough to learn exactly what it is? We don’t blame you, insurance, no matter what kind, is never an exciting subject.
No worries folks, that’s what we are here for. To make insurance easy for you and the rest of Malaysians seeking to know more about it and its importance!
So here we go:
When you purchase a medical plan, your insurance company will issue a card to you that entitles you to certain privileges as according to your medical plan. You can receive medical treatments (as long as the treatments are covered by your plan) at any panel hospital.
The best thing about it is perhaps the seamless registration and if your medical plan allows it – cashless admission and treatments. This means that you no longer have to worry about making the payment out of your own pocket, as your insurance company will take care of the medical bill for you.
Most insurance companies offer several types of medical plans for customer to choose from. They usually vary in terms of coverage such as total annual and lifetime limit, hospital allowance, type of treatments covered and so on. The yearly premium (or price) you have to pay to the insurer will depend on the type of plan you have chosen. Once your application for the plan is approved, the insurance company shall issue you a card which you can present at any of its panel hospital to receive treatment.
To get admission into a hospital, you must first obtain a referral letter from a doctor that consents to the admission. If all goes well, your insurance company will issue a guarantee letter to the hospital allowing your admission. To avoid complications during admission and claim, it is best to check with your insurance agent or direct with your insurer before admission.
There are generally two types of cards offered by insurance companies, standalone and rider. Here’s a brief descriptions of what they are:
Standalone is a type of medical plan that you can purchase on its own. It offers comprehensive medical protection and nothing else (which is probably what you want). And since there is no additional coverage, the premium you pay for standalone medical card is cheaper than rider as you only pay for your medical coverage.
Some of the disadvantages of a standalone plan: There is no cash value generated from the premium that you pay. Much like motor insurance, you reap no monetary reward for the premium that you pay towards your standalone plan especially if no claim is made – unlike rider plan. Renewal of standalone plan is not guaranteed by the insurer. In case you are diagnosed with an illness and made a claim from your insurance company, the same insurance company may opt to not renew your policy for the following year. Aside from these, the premium for standalone medical is not fixed whereby it increases according to your age as well as medical inflation rate.
Unlike standalone plan, a rider medical plan comes as an add-on coverage to a main plan, such as life insurance with investment-linked policy. Naturally the premium for this type of plan is higher than that of a standalone, as you are not only paying for medical coverage, but also part of your premium goes towards your life protection and savings.
Since part of the premium paid goes towards an investment fund, there is cash value generated which allows you to withdraw for personal use. This cash value is also useful to cover for any late premium payment. This means that your policy will not lapse as easily as a plan without cash value.
The premium rate for rider plan is fixed at the age of the insured at the time he enters into the contract. However, small increment may be made from time to time depending on rising medical inflation rate.
The downsides to medical coverage as a rider is that you will need to pay a lot more since you aren’t only just paying for medical coverage. Also your medical coverage will automatically terminated once the main policy comes to an end such as when the insured suffers a total and permanent disability.
Co-insurance is the amount, usually in percentage (10%, 20%) of the total medical cost which you have to pay on your own. Not all plans come with co-insurance so it is up to you to choose if you’d like to have co-insurance in your plan. The premium for a co-insurance plan is usually lower than a similar plan without co-insurance. We’ll explain below:
Scenario A – plan with co-insurance:
Monthly premium RM 200
Co-insurance: 20%
When the insured is admitted to a hospital for treatment, his total medical cost is RM 5,000. Because of the 20% co-insurance, he is required to pay RM 1,000 (20% of RM 5,000). While his insurance company will pay for the rest (RM 4,000).
Scenario B – plan without co-insurance:
Monthly premium RM 300
Co-insurance: None
When the insured receives his medical bill amounting to RM 5,000, he is not required to pay anything. Under this plan, his insurer pays for 100% of the bill.
Annual limit is the maximum amount you are entitled to for any medical claim made for one policy year. For instance, if your card offers an annual limit of RM 100,000, you can only claim for this amount from your medical policy for the said policy period. Should your medical expenses during that year exceeds RM 100,000, you would need to pay for the excess on your own. However, if you require more treatment the following year (based on policy year and not calendar year), you are again entitled to another RM 100,000 coverage.
Here’s what we mean:
First policy year – Total medical cost: RM 120,000
Insurance company pays: RM 100,000
The insured pays: RM 20,000
Second policy year – Total medical cost: RM 100,000
Insurance company pays: RM 100,000
The insured pays: RM 0
This is the maximum amount your insurer will pay out to cover for your medical claims during YOUR LIFETIME. Your policy will be terminated automatically once this limit is reached. Some plans however, especially standalone medical plans, come with an unlimited coverage.
Some people only place importance on this type of limit. The millions of ringgit in lifetime limit is usually are what catches their attention and assuring them that they have sufficient coverage, hence neglecting the importance of annual limit. We’ll elaborate why it is also important to pay attention to the sum of annual limit:
If a plan comes with an RM 1 million lifetime limit and an RM 100,000, the insured would need to spend RM 100,000 a year on medical treatment for 10 years to ‘enjoy’ the full benefit of RM 1 million lifetime limit. More often than not, a patient does not suffer from an illness over this extended amount of time. They are usually cured within a few years, or sadly do not survive the illness. With this in mind, it may be wise to place equal importance when considering a medical plan.
For each day you spend in the hospital, you will receive a daily hospital allowance from your medical plan. The amount is fixed on a daily basis as agreed according to your plan. What you do with this money is totally up to you. This money may be what you need should you lose your income due to an illness or accident. This benefit also comes in handful when you are billed for certain medical expenses that are not covered under your medical insurance plan.
Your card will also pay for your daily room charges during your stay in the hospital. A plan with an RM200 room and board means you are entitle to a room not exceeding that amount. If you wish to upgrade to a more luxurious room, you will need to fork out the difference in cost yourself. However, please be aware that this move may result in you having to co-pay a portion of the total medical bill. So please check with your agent or insurance company before requesting for a room upgrade.
Each medical plan comes with its list of panel hospital you can get medical treatments from. A plan with lower coverage and premium may not entitle you to a 5-star hospital. Therefore it is important to check the list of hospitals before making your decision to purchase. You should ensure that the hospitals are reputable as well as easily accessible to you.
If you are planning to purchase a medical plan and need to know more about medical insurance, it may be best to consult several insurance advisors. We hope that this article has provided a few pointers that can help you prepare.
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