Workers Feel The Pinch As Benefits Shrink

Christina Chandra

25th September 2025 - 3 min read

As healthcare costs continue to climb, Malaysian employees are looking beyond their company benefits for medical coverage. With employers facing financial pressure, many are reducing health benefits, a trend that is prompting workers to explore personal insurance, spousal plans, and even alternative income streams to secure their health.

The Rising Cost Of Employer-Provided Healthcare

A recent report by Aon, the 2025 Malaysia Employee Benefits and Wellbeing Report, highlights that employers are grappling with annual cost increases of 5% to 10%. This is primarily driven by medical inflation and a rise in the use of benefits. Financial strain is forcing some companies to scale back on the health perks they offer, leaving employees to navigate a more challenging healthcare landscape.

A Look At Individual Experiences

The impact of these changes is felt directly by employees. Mizi, a 33-year-old engineer, noted his company has significantly cut its health benefits, leaving him with an annual outpatient allocation of only RM500. He explained that this is a stark contrast to previous coverage which included unlimited outpatient visits, unlimited hospitalisation, and separate allowances for optical and dental care for both staff and their families. To adapt, Mizi has invested in a personal insurance plan and supplements his income with freelance work.

Network engineer Ridzwan Mohamed, aged 33, has experienced a removal of his outpatient benefits and a reduction in the number of hospitals covered by his company’s inpatient plan. His family now relies on his wife’s health plan, as her employer provides coverage for dependents. A 35-year-old writer, who chose to remain anonymous, mentioned his company is reportedly considering changes that could affect older employees, potentially forcing them to purchase additional insurance.

Seeking Solutions For Businesses And Workers

Industry and consumer groups suggest that instead of cutting benefits, companies, particularly micro, small, and medium enterprises (MSMEs), could focus on rewarding preventive health measures. Dr Yeah Kim Leng, an economist at Sunway University, suggests that reducing health benefits should be a last resort for MSMEs, as this can transfer the financial burden onto employees and increase the strain on public hospitals. He recommends that the government promote affordable health plans for MSMEs through tax incentives, subsidies, and co-financing.

Professor Dr Chung Tin Fah from HELP University proposes that employers integrate risk-prevention incentives into salaries, encouraging healthier lifestyles and reducing long-term costs for businesses. Meanwhile, Mohideen Abdul Kader, the president of the Consumers’ Association of Penang, views universal healthcare as the most effective long-term solution. He notes that existing government subsidies for the B40 income group, such as the Madani medical scheme which provides free treatment at registered private clinics, are only temporary fixes.

What Malaysians Told Us In RMFLS 2025

Findings from the upcoming RinggitPlus Malaysian Financial Literacy Survey (RMFLS) 2025 echo these concerns, showing that rising insurance and Takaful costs have already led many Malaysians to cut or downgrade their coverage.

Stay tuned for the full RMFLS 2025 report, launching on 1 October, for a deeper dive into how Malaysians are balancing healthcare, insurance, and long-term financial security.

Christina Chandra

Christina writes about personal finance with an eye for making the complicated feel straightforward. She is drawn to the everyday money decisions people face and genuinely enjoys finding the clearest way to explain them. Between articles, she is probably napping, on a hiking trail, or terrorising her sister’s cats.

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