Selangor Guide for Employee Medical Insurance Coverage

For a small business in Selangor, getting “medical coverage” right is tricky because there is a massive gap between what is legally required (very little) and what is expected by the society(a lot).

If you are setting up a company in Petaling Jaya or Subang Jaya, purely sticking to the legal minimum will make it difficult to hire skilled talent, as candidates often ask, “Company got provide medical card or not?”

Here is the deep dive into medical coverage for Selangor-based SMEs, categorized by Statutory (Must-Have), State Support (Free/Low Cost), and Private (Market Standard).

1. The Legal Minimum (Mandatory by Law)

You must provide these two things. Failure to do so is a criminal offense.

A. SOCSO (PERKESO)

This is not your “medical insurance” in the traditional sense; it is more like a workplace accident and injury protection insurance.

• Coverage:
  • Employment Injury Scheme: Covers accidents at work or commuting to/from work. It pays for medical treatment at panel clinics/government hospitals and rehabilitation.
  • Invalidity Scheme: Covers 24-hour death or invalidity (even if not work-related), paying a pension to the employee or family.
• Cost: Approx. 1.75% of the employee’s monthly wage (Employer contributes ~1.25%, Employee ~0.5%).
• Action Item: You must register with SOCSO within 30 days of hiring your first employee.

B. Sick Leave & Hospitalization (Employment Act 1955)

You are not required by law to pay for a private doctor’s bill, but you are required to pay the employee’s salary while they are sick.

• Paid Sick Leave: 14 to 22 days/year (depending on years of service).
• Paid Hospitalization Leave: 60 days/year.
• Medical Bill Reimbursement:
  • In Malaysia, the Employment Act 1955 mandates paid sick leave but does not require employers to cover medical expenses for outpatient or inpatient care, such being discretionary. This leaves many employees to bear the financial burden of healthcare, relying on personal savings or overcrowded government facilities.
  • Reality: Most employers set a cap (e.g., “Medical Claims up to RM50/visit”) if they offer any medical bill reimbursement to a local private GP.

2. Selangor-Specific State Schemes (The “Hidden” Perks)

As a Selangor business, you can leverage state programs to help your lower-income staff (B40) without hurting your cash flow. These are unique to Selangor.

Iltizam Selangor Sihat (ISS) – Formerly Skim Peduli Sihat

• What it is: A health card for B40 Selangor residents (household income <RM3,000).
• Coverage:
  • Basic treatment at panel clinics (GP) up to RM500/year.
  • Vaccinations and basic screenings.
• Business Hack: If you hire lower-wage staff (e.g., cleaners, general workers), check if they qualify for ISS. If they do, you might not need to offer them a private outpatient allowance, as the state covers it.

This is the most valuable “free” perk you can help your B40 staff apply for.

• Benefits:
  • GP Clinic Visits: RM500 / year coverage for basic illness (fever, flu).
  • Vaccinations: Free targeted vaccinations (e.g., Pneumococcal, Influenza).
  • Hospitalization: Minimal financial assistance (not full private coverage).
• Action for Employers:
  • Ask your cleaning staff, drivers, or general workers if they are registered for ISS.
  • If they are, they can visit panel clinics for free, saving you the cost of reimbursing their medical receipts
  • Just being made aware of this state support scheme allows lower paid employees gain access to essential healthcare.

3. Private Medical Insurance (The “Talent Magnet”)

For executive/skilled staff/knowledge workers/professionals, SOCSO and government hospitals are rarely considered “enough.” These more qualified workforce expect a Group Hospitalization & Surgical (GHS) card.

Typical SME Coverage Levels in Selangor

Based on current market trends for small businesses in areas like PJ and Shah Alam:

The “Cashless” vs. “Pay & Claim” Trap

• Cashless (Card): Employee shows card, hospital bills insurance directly. (Premiums are higher).
• Pay & Claim: Employee pays first, you reimburse them, then you claim from insurance. (Cheaper premiums, but employees hate this because they often don’t have RM5k cash lying around for admission deposits).
• Recommendation: For a small business, get a Cashless Admission plan but keep Outpatient (GP visits) on a “Pay & Claim” basis with a strict limit.

A company provided medical card allows employees with no medical insurance coverage access to private & quality healthcare. This translates into a great savings for people who are employed by you because medical insurance is getting more expensive by the year.

4. Strategic Implementation for Selangor Based Businesses

Phase 1: Startup (1–5 Employees)

• Focus: Cash flow protection, because small businesses need maximum cash preservation.
• Action:
  1. Mandatory: Pay SOCSO & EIS.
  2. State Benefit: Ensure all staff register for INSAN (Free).
  3. Basic Medical: Offer a “Medical Allowance” of RM50 per month in cash instead of buying insurance. This is simpler to administer. Staff can use it to buy their own personal medical card (which is better for them long-term anyway).

Phase 2: Growth (6+ Employees)

• Focus: Attract and retain talents that can help your business grow.
• Action:
  1. Group Insurance: Buy a “Group Hospitalization” policy.
  2. Top Providers for SMEs: AIA (A-SME Flex), Allianz (SME Choice), and Zurich often have aggressive pricing for groups as small as 5 people.
  3. Cost Control: Set the “Room & Board” rate to RM150. This is the biggest factor in premium costs. If staff want a VIP room, they can top up the difference themselves.

Summary Checklist

1. Register SOCSO: Do this immediately upon hiring.
2. Check Residency: Ask staff if they are “Anak Selangor” or voters in Selangor to enroll them in INSAN.
3. Decide on Outpatient: Will you reimburse their fever/flu clinic visits? If yes, cap it (e.g., max RM50 per receipt).
4. Avoid Long Contracts: When buying private insurance, ensure the policy is renewable yearly and doesn’t lock you in if you need to downsize.