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5 Reasons You Can’t Rely on Employer Medical Insurance

Things related to medical insurance such as ECG, stethoscope and medicine.

So, you are receiving medical insurance coverage from your employer? That’s great!

Some generous employer even extends medical coverage to the employee’s spouse and children. Which is really awesome.

This means you have additional medical and health protection from your employer other than the mandatory SOCSO.

Then, you were thinking:

  • the company medical card will take care of all my (and my family’s) medical, hospitalization and surgical needs
  • perhaps I can cancel my existing medical cards
  • I can save money from paying medical card premiums and spend the money on a family vacation instead
  • this is a great excuse to tell annoying insurance agent friends to stop selling to me

If you think that you and your family are happy with your employer’s medical coverage, think again.

Because you might be wrong! It could be a great mistake to solely depend on your employee’s health benefits for you and your family’s medical needs.

Thus, for this post, I will be sharing 5 reasons why you can’t rely on your employer’s medical coverage.

And I also share my suggestions on how to reduce your dependency on your employer’s medical insurance.

Table of Contents

[Disclaimer: I am not a certified financial planner. My sharing is purely based on my own research and personal experience. To make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a certified financial planner if necessary]

5 reasons you can’t rely on employer medical insurance

Perhaps you are aware of some of the reasons below. Or perhaps you are just too busy to think about the importance of having your own medical insurance instead of relying on your employer’s medical insurance.

Whatever it is, just take a quick look at the reasons below:

1. You might change employment

Employer medical insurance or company medical card is only for its existing employees. In other words, you get to enjoy the medical benefits as long as you are still under that particular employment.

But, someday, you might be changing your employment. So, when you resigned, you no longer enjoy the medical benefits from your previous employer.

Usually, we hope to move on to a better employer with better employee benefits including medical insurance benefits.

But, what if the new employer does not include medical insurance as part of its employee benefits?

Or, what about those days or months when you are unemployed? Or, if you decided to take a break from work aka mini-retirement like me?

Health conditions can change overnight.

If you don’t have your own medical insurance and rely on employer medical insurance, there are possibilities you will be left without medical coverage.

2. You might lose your job

Even if you have no plan to quit your job (which comes with group medical insurance) and plan to work until your retirement, you still might lose your job.

Among the possibilities are:

  • Retrenchment due to cost-cutting and adoption of new technology which requires fewer employees
  • VSS or MSS as a result of Merge and Acquisition or change of business strategy
  • A serious critical illness or accident causing one not able to continue to work
  • Dismissal due to a work rules violation

In short, there is no such thing as job security anymore.

As much as we love to work in the same company until retirement, there is no guarantee that we are able to hold on to our job until retirement.

When we lose our job, automatically we no longer enjoy employee benefits including medical insurance coverage.

3. Your employer might decide to change, reduce or discontinue medical card benefits

From time to time, due to cost-cutting and other priorities, your employer might decide to:

  • trim down and change the medical insurance benefits
  • switch the provider of the group medical insurance
  • discontinue the group medical coverage for employees

Sometimes, even though reluctant, the company might need to make these drastic changes to reduce costs, just to stay afloat and survive.

Since the medical coverage belongs to the employer, the company management team has the decision on matters related to the group’s medical insurance.

So, when these changes took place, it affects your medical insurance too.

4. The employer’s medical insurance coverage might not suit your needs

Usually, the company medical cards only provide basic medical coverage for its employee.

Thus, there might be limitations on some of the important parts of medical insurance such as:

  • low annual limit and lifetime limit
  • minimal Room and Board rate
  • limited physician visits per day
  • limited outpatient treatment claim

These basic medical insurance coverage might not meet your and your family’s medical insurance needs. Because group medical insurance is to meet the company’s needs and not its employees’ needs.

Let’s take the example of an employee’s medical insurance with an outpatient treatment of RM20,000 per year. This RM20,000 might not be sufficient to cover illnesses such as cancer treatment and kidney dialysis.

If the employee relies on the employer’s medical insurance, he will need to fork out his own savings to cover the remaining treatment cost.

So, this is another reason why you can’t rely on employer medical insurance coverage.

5. You will hit retirement at 60 years old

Assuming everything is smooth and nice. But, when you reach 60 years old, you will hit retirement. When you retire from your employment, you are officially not covered by the company’s medical insurance.

This is sad if you don’t have your own medical insurance. Because as we grow older, the need for medical coverage increases.

In other words, the time of retirement and onwards most probably is the time you need medical care the most.

Of course, you can start to look around for medical insurance after retirement. But, you might face the following:

  • rejections from insurance providers due to health problems
  • high medical insurance premium with exclusions on pre-existing illness
  • heavy loadings on the medical premium if insurance providers agree on coverage

Thus, you can’t rely on your employer’s medical insurance because it does not belong to you.

How to reduce dependency on employer medical insurance?

Now, after reading the 5 reasons above, you might have 2 reactions:

A. I am content with my employer’s medical insurance

If you are still happy and content with your employer’s medical insurance, I suggest the following:

#1 Prepare a saving plan just for medical purposes

Yes, you need to force yourself to save and put aside a big percentage of your take-home pay to cater to your medical needs, especially after retirement.

Because healthcare inflation is high and will keep rising. If you don’t have medical insurance, most probably you will need to fork out your own savings to cater for your healthcare needs.

#2 Prepare to seek medical needs at the government clinic and hospitals

If you don’t have medical cards, another option for medical needs will be the government clinics and hospitals.

Based on my experience giving birth at Sarawak General Hospital, the skills and treatment at government hospitals can be better compared to some private hospitals. Unless your case is special, is an emergency and high priority, else, please bear with the long waiting list.

Do take note that you can’t get everything with just the RM1 fee or (RM5 for the government specialist clinic) at the government clinic and hospitals. For example, patients still need to pay for the equipment needed for knee replacement surgery.

So, you still need to prepare money from your own pocket.

B. I want to have my own medical insurance coverage

I believe the majority of us would love to have our own medical insurance coverage. Especially for those with dependents. Because we know medical expenses can be huge and can bring financial disasters.

For those who wish to have their individual medical insurance and are financially ready, you might find Ringgitplus’s comparison on Best Medical Cards in Malaysia useful.

For those with a limited budget, you can consider the following:

#1 Get a deductible medical card

Deductible medical cards are medical cards that require you (the insured) to pay an agreed amount (deductible) before the insurance company (insurer) pay the balance of the medical bill.

It also works as a supplementary medical card to cover the balance of the medical bill from your first card.

For example, Prudential PRUValue Med offers deductible options of RM20,000, RM50,000, RM75,000 and RM100,000.

A further illustration is below:

  • Your employer’s medical card annual limit: RM20,000
  • PRUValue Med deductible: RM20,000
  • Your medical bill: RM60,000
  • Solution: Your employer’s medical card will pay the first RM20,000 and Prudential will pay the balance of RM40,000

The above illustration is for during employment. After retirement, the insured has the option to convert the deductible medical card to RM0. In other words, the medical card act as a normal medical card within the package limit.

One of the best parts of a deductible medical card is that it comes with a lower premium, that is the higher the deductible amount, the lower the premium.

This best suit those with a tight budget.

But, before you make your decision, it is best to check the policies’ rules and requirements.

#2 Get a standalone medical card

Another option would be to get a standalone medical card as your individual medical coverage.

Even though medical insurance premium is based on the insured’s age, a standalone plan can be more affordable due to not being attached to savings or investment policies.

Before you sign up, do consider some of the disadvantages of standalone medical cards as below:

  • Premium hike at the next age-band
    • this is something we can’t avoid. As we grow older, the cost of insurance increases
  • Coverage based on the renewal of premium
    • protection ceased when there is no payment received
  • Rejections, exclusions and premium loadings
    • some insurance provider has the right to reject, exclude certain coverage or increase loadings on insured

For further reading on the disadvantages of standalone medical cards, you can read my sharing standalone versus investment-linked plans (for medical insurance).

It is important for you to read the fine print and know the underlying risks before you sign up for any plans. If you don’t understand, ask the insurance provider until you get it. So, you can make an informed decision.

At the time of writing, you can get standalone medical cards through:

  • insurance agents
  • direct walk-in to the insurance local branch office
  • online registration via the insurance company website
  • online registration via financial comparison websites such as RinggitPlus

Despite its disadvantages, with careful consideration and selection, a standalone medical card can still provide the medical coverage needed by the insured.

Final thoughts on why you can’t rely on employer medical insurance coverage

In summary, employees can’t rely on employer medical insurance coverage. Instead, they should treat employer medical insurance as an additional benefit while they are still employed.

And they must have their own medical insurance. Because this is the policy that belongs to them and will cover their needs as long as they pay the premium.

The most important part is individual medical insurance will provide coverage based on the insured unique needs and requirements. The insured also can also ‘modify’ the coverage based on his changing needs at different stages of life.

Whereas, for employer medical insurance, as an employee, you don’t have control over the coverage. And in most cases, it waves goodbye when you wave goodbye to your employer.

My readers, I wish to know the following:

  • are you currently relying on your employer’s medical insurance?
  • do you have both a company medical card and an individual medical card?

If you are an insurance agent reading this, share with me what are the suggestions for those under employer medical insurance looking for an individual medical card.

To end this post, the above is purely my personal opinion based on my experience as someone who was under the employer’s medical insurance coverage. I am not an insurance agent or an insurance expert. I am just a normal insurance user like you.

Feel free to share your view and comment below.

Image Credits

Image by Myriam Zilles from Pixabay

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