5 Things to Know Before Choosing a Medical / Medical Card

Before choosing a medical card or medical card, it is important to realize that not all health coverage plans are created equal and hasty decisions based only on the price of monthly contributions often lead to disappointment later on.

The majority of people today are aware of the importance of having a medical card, but there are various medical card packages or medical cards in the market that offer different benefits, specifications and prices.

Understanding some basic things about the medical card is important to ensure that we get the benefits in parallel with the money paid every month as a medical card contribution.

1. Stand-Alone and Rider

The first thing in designing a medical card or medical card is to understand the difference between a stand-alone plan and a rider plan that is part of a comprehensive package.

A stand-alone medical card offers medical coverage benefits exclusively without any additional coverage such as death or investment benefits.

At the initial stage of participation, the contribution rate for a stand-alone plan seems cheaper and attractive, but you need to remember that these contributions will increase automatically according to the age schedule, usually every four to five years when you enter a new age group.

On the other hand, the rider design that is often referred to as a three-in-one plan combines basic coverage, medical coverage and investment components in one package and the initial contribution is necessarily more expensive because many benefits are offered for one package.

More interestingly, the rider plan provides a cash fund that can be withdrawn for personal use in the future, and if you miss a payment, this fund will automatically cover the monthly contribution, making the risk of the certificate lapsing much lower.

Therefore, the selection of this design should be based on the protection period and your financial stability.

2. Specifications for Annual Limit and Lifetime Limit

The most critical specifications in a medical card or medical card are two types of coverage limits, which are annual limits and lifetime limits.

Annual limit means the maximum amount of medical benefits that can be claimed in a calendar year.

For example, if your card has an annual limit of RM200,000, and you undergo intensive treatment that costs RM250,000 in the first year, then the insurance company will only cover RM200,000 while the remaining RM50,000 has to be paid from your own pocket.

In the second year, if the treatment cost is RM200,000, you do not need to spend additional money because the amount is still within the annual limit.

Meanwhile, the lifetime limit is the maximum cumulative amount that can be claimed while your certificate is still in effect.

For example, if the lifetime limit is set at RM1,000,000, after five years you have used that amount cumulatively, then your certificate will automatically expire and you will lose full coverage.

In the context of medical inflation that reaches around ten percent per year, the cost of treatment worth RM50,000 today will jump to RM330,000 twenty years from now.

As such, the more important specification to pay attention to is choosing an unlimited or very high lifetime limit, as opposed to just being excited about a large annual limit but a limited lifetime limit.

Related article: Takaful & Medical Cards For Children: When Is The Right Time?

3. Hospital Room and Accommodation Prices

Each medical card or medical card allocates a different hospital room price limit according to the selected plan variant and this directly affects the monthly premium you have to pay.

If you choose the variant with a room limit of RM200 per day, you are eligible to stay in a room that costs no more than RM200 per night, either a shared room or a private room, as long as the price is within that range.

If you choose to stay in a more expensive room, say RM350 per night due to the lack of rooms within the limit, then the excess of RM150 per night will have to be borne by you.

More than that, some plan variants also have a co-takaful element where you have to pay a percentage of the total hospital bill as co-cost.

Therefore, the low room rate variant may save you a monthly contribution but there is a high risk of leaving you with a large out-of-pocket cost when hospitalized.

On the other hand, a variant with a higher room limit gives peace of mind because you don’t have to worry about the lack of room in the price range.

Make sure you do your research on the actual cost of private wards in major urban areas as the difference between a hospital in a big city and a small town can reach tens of ringgits per night.

4. Additional Benefits – Daily Cash Allowance

In addition to the main component of medical coverage, there is an additional benefit variant in the medical card or medical card that is often overlooked, which is the daily cash allowance.

This benefit is given to the contributor for each day of hospitalization, regardless of whether you make a medical claim or not.

For example, if your plan offers a daily cash allowance of RM200 and you are hospitalized for five days, you will receive RM1,000 in cash directly into the account.

This money can be used to cover a variety of additional costs such as paying an aide to look after the children at home while you are being treated, covering the cost of family travel to the hospital, or simply replacing lost income due to not being able to work.

However, it should be understood that the daily cash allowance is usually an optional or additional benefit, not part of the basic package.

The option of this additional benefit is particularly important for those who are self-employed or in business, where there is no paid sick leave provided by the employer while for individuals who are salaried and have sufficient sick leave, this benefit may not be so critical and you can choose not to include it in the package in order to reduce the monthly contribution. 5.

5. Pricing and Long Term Contribution Structure

Last but not least is to understand the actual price and long-term contribution structure of each medical card variant or medical card being considered.

Many buyers make the classic mistake of only comparing monthly prices in the first year of participation, without investigating how the price structure changes with age.

For a stand-alone plan, the price will increase drastically each time you enter a new age group, for example at 30 years, 35 years, 40 years and so on with increases of up to 30 to 50 percent at each stage.

While for the rider plan, although the initial price is between 20 to 40 percent higher than the stand-alone, most of the rider plans offer a fixed and stable price structure until old age.

You also need to take into account the possibility of a revision of the contribution rate known as “re-pricing” by the insurance company or takaful and when re-pricing occurs due to high medical inflation, both types of stand-alone and rider plans may require you to increase the contribution.

In conclusion, choosing a medical card or medical card is a long-term financial decision that requires careful research on the design, specifications, variants and prices of the plans offered.

Get advice from a certified takaful or insurance consultant to help you analyze personal needs based on age, income, health status, and family dependents.

Remember, having a medical card with less than perfect coverage is better than nothing at all, but having a carefully planned card based on a deep understanding of these five points will provide lifelong peace of mind.