Rising Medical Insurance Costs Pose Challenges for Malaysian Employers
A significant majority of companies in Malaysia are anticipating a substantial increase in medical insurance costs in 2026, according to the latest survey conducted by the Malaysian Employers Federation (MEF). The findings reveal that nearly seven out of ten companies are concerned about the rising expenses associated with medical benefits, with many struggling to maintain existing coverage as premiums continue to climb.
During the launch of the Medical Benefits 2025 survey, 68% of respondents indicated that they expect a notable increase in medical costs next year. Meanwhile, 31% believe there will be no change, and only 1% anticipate a decrease. MEF president Datuk Syed Hussain Syed Husman highlighted the growing challenges faced by employers, stating that many are already finding it difficult to sustain their current medical schemes.
“Many companies are already struggling with the schemes they have now, so if medical costs keep going up, employers simply cannot sustain it 100 percent anymore,” he said. He added that more companies may need to adopt co-sharing models or reduce coverage due to the increasing financial burden.
Datuk Shamsuddin Bardan, an MEF adviser and former executive director, noted that some firms have already opted out of group medical insurance, choosing instead to self-insure because the premiums exceed the value of claims. “They said the premium is higher than what they spend on actual medical claims. So they’d rather invest the money themselves and pay as they go,” he explained.
MEF warned that the issue will become more severe as Malaysia transitions into an ageing society. With more senior employees remaining in the workforce, they face “super premium” charges or even outright rejection by insurers. “Some insurers simply say they don’t want to cover senior citizens because it’s a sure loss for them. This must be addressed if the government wants to encourage older Malaysians to remain employed,” he added.
Common Medical Benefits Offered by Companies
The survey also highlighted the most common medical benefits offered by companies. Outpatient consultation was the most prevalent at 95.2%, followed by hospitalisation and surgical treatment at 88.8%. Specialist consultation was provided by 64.7% of companies, while dental coverage was available in 68% of cases. Optical benefits were offered by 40% of participants.
Outpatient coverage was most commonly provided with a specified limit, which was offered by 71.6% of companies. Only 9.6% of companies provided unlimited, fully paid outpatient care. Coverage via medical insurance accounted for 20.1%.
Mental Health Challenges Among Employees
Mental health challenges among employees were also a focus of the survey. Stress and pressure to meet targets were cited as the top concern, affecting 74% of respondents. Personal or family issues were reported by 59.7%, while burnout was mentioned by 51.9%. Anxiety or fear was a concern for 47.4% of employees, and bullying or harassment was reported by 16.9%.
AI Adoption in the Workplace
The 2025 survey also explored the adoption of artificial intelligence (AI) in companies. It found that 74.1% of companies were familiar with AI, with 10.7% being very familiar. Another 10.7% had heard of AI but were unsure, while 4.4% were unfamiliar with the technology.
Regarding implementation, 37.3% of companies have adopted AI, while 26% have not. An additional 19.1% plan to adopt it, and 17.6% remain unsure. The main barriers to AI implementation include high costs (67.8%), lack of internal expertise (66.7%), and cybersecurity or ethical concerns (53%).
Survey Participation and Demographics
The survey involved a total of 231 companies, with 98.3% being MEF members. Non-manufacturing firms made up 64.9% of the participants, while 35.1% were from the manufacturing sector. These findings provide valuable insights into the evolving landscape of medical benefits and technological adoption in Malaysian businesses.