Must Employers Provide Employees With Medical Insurance in Malaysia?

Disclaimer: This article should not be considered to be legal advice, and altHR is not liable for any actions taken based on this article.‍‍

The overall well-being of your employees is a critical part of succeeding as a business in Malaysia. As employers and HR professionals, it’s important to take proactive steps to ensure that employees’ mental health and physical well-being are cared for — because healthy, fulfilled, and yes, happy employees are the foundation of any well-run company. 

Sometimes, however, health issues are a factor that can be difficult to plan for. As such, many employers in Malaysia offer medical insurance as a fringe benefit, where employees are covered for medical expenses up to a certain limit, and even for yearly checkups to ensure that any potential health issues are discovered early. 

But is this a legal requirement? Do employers need to provide employees with medical insurance in Malaysia? ‍

The short answer: No

There is no mandatory requirement for employers to offer medical coverage or insurance as a benefit to employees in Malaysia. This means that — as always — you need to examine the terms and conditions within your own employment contract or employee handbook to understand if your company offers any form of medical coverage. 

Employers, however, are highly advised to offer this benefit to their employees. Besides the obvious benefits of medical insurance (protection for your employees’ health), medical coverage stands among the most popular staff benefits for Malaysian employees in 2021, as we discovered in a recent mini-survey. 

The primary reason for this, naturally, is that medical insurance offers employees the peace of mind when it comes to any potential medical expenses and issues. With the knowledge that their basic health and well-being is cared for, this ensures that your employees are fully focused at their daily work — and the overall success of your business.

However, if your company cannot afford to offer medical insurance to employees, an alternative is to offer medical coverage as a claim-based expense. This requires some medical policy drafting, particularly with regards to expense limits, but the gist of it should be that employees can lean on the company for financial assistance if/when medical issues arise. ‍

What about SOCSO?

That’s not to say that there is zero protection for employees who suffer from medical problems while employed in Malaysia. SOCSO (Social Security Organisation), also known as PERKESO, offers two insurance schemes for eligible members:

• Employee Injury Scheme: This provides protection to employees against accident or occupational diseases that arise out of, and in the course of their employment. Benefits under this scheme include medical benefits, temporary/permanent disablement benefits, and even benefits for dependants and funerals, if required.    
  

• Invalidity Scheme: This provides 24-hour coverage to employees who suffer from invalidity or death due to any cause — even if it isn’t related to their employment. 

However, you should note that not every employee is covered by SOCSO. According to PERKESO, all employees employed under a contract of service/apprenticeships in the private sector, as well as contractual/temporary staff of Federal/State governments and statutory bodies must be registered and covered by SOCSO. 

The following employees are not covered by SOCSO: 

• Federal and State Government permanent employees
• Domestic servants
• Self-employed
• Spouses of a sole proprietor or a partnership owner
  

The Employment Insurance System (EIS)

If you’ve glanced at your payslip at any point over the past couple of years, you might have spotted a monthly deduction under EIS — this is a form of insurance that is mandatory for all employers to offer in Malaysia: the Employment Insurance System (EIS). 

Also implemented by PERKESO from 2018, the EIS is essentially a financial scheme to help employees who lost their jobs with temporary financial assistance. All employees between the ages of 18–60 are required to contribute, and the requirements to make a claim are as follows: 

• Apply within 60 days after their Loss of Employment (LOE).
• Meet our Contributions Qualifying Conditions (CQC) (i.e. must have paid contributions to SOCSO EIS for a minimum number of months within a specified period)
• Be unemployed under our definition of Loss of Employment (LOE)
  

However, there are no benefits here with regards to medical coverage. As such, the EIS should not be considered as a fallback for employees who require financial assistance for medical expenses.