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Foreign Worker Medical Insurance

With effect from January 1, 2011, all foreign workers must be covered by medical insurance. Details are as follows:

  1. The "Foreign Worker Hospitalisation and Surgical Scheme"provides medical coverage up to RM10,000 to each foreign worker for treatment and hospitalisation in government hospitals. Medical benefits would be charged consistent with Third (3rd) Class room and board, up to a maximum of RM60 per day. The scheme covers injuries, accident and sickness.

  2. The annual premium for each worker is RM120 excluding 6% service tax and RM10 stamp duty.

  3. The annual premium is to be borne by the foreign worker (employee) except for the plantation industry and domestic maids where premiums would be borne by the employer.

  4. The list of the 17 insurance companies offering the "Foreign Worker Hospitalisation and Surgical Scheme"are as follows:

No. Insurance Company Approved Effective:
1 Allianz General Insurance Malaysia Bhd Jan 2011
2 AXA Affin Assurance Bhd Jan 2011
3 Berjaya Sompo Insurance Bhd Jan 2011
4 Jerneh Insurance Bhd Jan 2011
5 Kurnia Insurans (Malaysia) Bhd Jan 2011
6 Lonpac Insurance Bhd Jan 2011
7 Malaysian Assurance Alliance Bhd Jan 2011
8 MUI Continental Insurance Bhd Jan 2011
9 Oriental Capital Assurance Bhd Jan 2011
10 Overseas Assurance Corporation (M) Bhd
(formerly known as  Tahan Insurance Malaysia Bhd)
Jan 2011
11 Progressive Insurance Bhd Jan 2011
12 QBE Insurance (M) Bhd Jan 2011
13 RHB Insurance Bhd Jan 2011
14 Syarikat Takaful Malaysia Bhd Jan 2011
15 Takaful Ikhlas Sdn Bhd Jan 2011
16 The Pacific Insurance Bhd Jan 2011
17 Tokio Marine Insurans (M) Bhd Jan 2011
18 Multi-Purpose Insurance Bhd Jan 2011
19 ETIQA Insurance Bhd Jul 2011
20 ETIQA Takaful Bhd Jul 2011
21 ING Insurance Bhd Jul 2011
22 UNI.ASIA General Insurance Bhd Jul 2011
23 AmG Insurance Bhd Aug 2011
24 MAA Takaful Bhd Aug 2011
 

Concerns and Problems Faced by the Manufacturing Sector in Regards to the Implementation of the Requirement.

  1. On the implementation of the scheme

    1. There should be prior consultation with stakeholders in all economic sectors on policies affecting business operations.

    2. There appears to be lack of coordination and support across agencies. Employers still have to obtain prior approval from the Director–General of Labour to make deductions from their foreign workers’ wages despite the scheme being a mandatory requirement imposed by another Government agency.

    3. The administrative and financial burden on employers is further aggravated when bringing in new foreign workers. Employers have to produce the proof of purchase of medical insurance at the point of application for calling visa for the new foreign workers. Employers have to pay the premium first to obtain calling visas.

    4. The scheme would have a definite spiral effect on the cost of doing business from pressure to also provide local workers with medical insurance. Companies that are currently providing medical insurance for local workers at a lower coverage would also be pressured to increase the limit. The scheme would create major industrial relations problems for employers especially in a unionised environment. Unions would use the mandatory insurance coverage to start negotiating for higher coverage and benefits. The Employment Act 1955 clearly states that there should not be discrimination in benefits accorded to local and foreign employees.

  2. On the rationale for introducing the scheme

    1. FMM estimates that the premium payment from the 1.8 million registered foreign workers would be a total of RM216 million a year, which is 12-fold of the RM18 million in unpaid hospitals bills in 2010, as announced by MOH. The excessive collection could easily cover the RM64 million in healthcare bills owed by foreign workers cumulatively between 2005 and 2009 of which only 19% was for care in government hospitals (based on Minister of Health’s statement in NST dated December 31, 2010)

    2. Of greater importance, the mandatory medical insurance scheme would NOT resolve the issue of unpaid government hospital bills. The manufacturing sector is strongly of the view that the main culprits are illegal foreign workers, the self–employed, those employed by sub-contracting agencies or transient workers in the construction and logging sectors. The scheme is effectively a subsidy by registered legal foreign workers to illegal workers.

    3. The scheme is UNFAIR to the manufacturing sector. Most employers in the manufacturing sector have already lodged a bank guarantee with MOH as a guarantee of payment for their workers, including foreign workers treatment at government hospitals. Companies also have to provide a guarantee letter to government hospitals before they could admit employees for hospitalisation.

      It is highly unlikely that non–payment or arrears in government hospital bills had been contributed by foreign workers in the manufacturing sector because hospitals could claim on the bank guarantee or the employer’s letter of guarantee. The manufacturing sector is NOT the defaulting party.

    4. The administration in government hospitals also has financial responsibility and accountability to ensure that proper procedures are followed, including in debt collection. The manufacturing sector should not be made to bear the burden of the government hospital administration’s inefficiencies and failure to take appropriate actions and follow–ups on debt collection.

    5. The Government had already expressed at the January 28, 2011 meeting that employers could opt to pay the premium. In fact, employers have to settle any arrears in government hospital bills incurred by their workers or face the consequences of not being allowed to recruit new workers. The manufacturing sector is most unhappy with the “roundabout” implementation to force employers to pay the premium.

  3. On the mandatory insurance scheme

    1. The premium is NOT justifiable for the medical benefits provided. The scheme only covers hospitalisation and surgical charges but not outpatient treatment. Employers/employees still have to bear these medical charges. The mandatory scheme is not giving value for money and only adds unnecessarily to the cost of doing business.

    2. In addition, employers in the manufacturing sector have to cover foreign workers under the Foreign Workers Compensation Scheme for occupational–related diseases and accidents. Some companies give additional cover under a group hospitalisation and surgery scheme. Most employers manage their medical expenses on an incurred basis through panel doctors, clinics and hospitals. Employees do not pay anything. Medical insurance must be paid regardless of use.

    3. The governments of source countries also require employers in the manufacturing sector to provide free medical benefit to their nationals as part of the terms and conditions in the contract of service. The Malaysian Government’s compulsory medical insurance requiring foreign workers to pay the premium would be in “violation” of the source country’s terms of employment and an employer’s contract of service with his workers. Consequently, to avoid industrial relations issues and breach of contract actions, employers would be compelled to pay the mandatory scheme.

    4. Countries like the Philippines further requires employers to purchase additional insurance at RM144 per worker per year from the source country for Filipino workers to cover contingencies such as accidental death, natural death, permanent total disability, repatriation cost, subsistence allowance, settlement claims, compassionate visits, medical evacuation and repatriation, etc.

    5. Altogether, the numerous insurance cover and medical benefits that the manufacturing sector have to take up for their foreign workers is clearly excessive and an over provision of coverage and benefits, imposing high overhead costs on businesses as mandatory schemes do not give employers leeway to consolidate and negotiate a value–for–money healthcare package with their choice of insurance companies.

 

FMM strongly objected to the mandatory medical insurance scheme for foreign workers and was of the view that:

  • The Government and the Ministry of Health in particular should abolish the requirement or defer implementation of the mandatory medical insurance scheme for foreign workers.

  • The Government should only be setting the minimum policy limit and type of medical treatment to be covered.

  • The Government should not need to appoint approved insurance service providers, set the premium rate, or class of treatment.

  • Employers should be allowed to consolidate and negotiate with the insurance companies of their choice for a comprehensive and value–for–money package that would fulfill the requirements of the relevant Malaysian authorities.

  • The Government, specifically the Ministry of Health should carry out a thorough analysis of the data on defaulters from government hospitals and identify the root causes and target groups.

FMM’s comments and recommendations were submitted to YAB Prime Minister on February 22, 2011 and in a joint memorandum with other industry associations and chambers of commerce on May 13, 2011.

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