In group medical insurance, co-payments actually benefits employees long-term

We’re into the second half of 2025. Companies have taken stock from the first-half and will have completed targets for the next six months.

Among the agenda items for many companies will be the renewal of their group medical insurance.  A lot can change in 12 months. Unfortunately, the only eye-catching change is the ever-increasing rate of healthcare inflation.

Two of the biggest global insurance intermediaries (separately) looked at the MEA region and calculated that gross medical cover inflation for 2025 is between 11% and just over 12%.

It’s another huge annual increase for what’s already the second biggest ‘people’ cost after salary. Far above the lower single-digit increase in Europe, for example.

One way of looking at that inflation level is as a ‘standard’ increase for insurance purchased today compared to a year ago. Especially if you don’t have a trusted insurance adviser negotiating on your side of the table.

Another critical factor going into that offered premium beyond inflation is how the policy has been used.

This can include issues such as:

• Are you attending hospitals that are in or not in the network?

• How has the number of minor illnesses changed, and what proportion included a visit to a clinic?

• What is the status of a company’s high-cost cases?

• Which benefits have been paid for but simply aren’t being used?

 In network versus out of network

The paradox of group medical insurance is that it’s a negotiated package of covered treatments and hospitals relevant to all – yet we’re all individuals.

What’s relevant here is the difference between ‘wants’ and ‘needs’.

Our needs are broadly covered by the negotiated network of facilities. That’s why it’s called ‘comprehensive’ cover.

We often find when employees make claims at hospitals outside the network, it’s often due to their personal preference – their ‘wants’.

Hospitals outside a negotiated network are more expensive. That’s a fact.

Employers mustn’t bear the total cost of that out-of-network usage. There should be some element of cost sharing between company and employee.

Now, cancer and serious conditions should never be penalised with a co-payment. Indeed, this is where comprehensive insurance ‘steps up’.

For everything else, choosing to go to a more expensive hospital outside the network is a ‘by-choice’ issue. 

I would also argue there should be co-pay on what you might call ‘branded’ medication. Maternity is another by-choice issue in which a co-pay should be expected.

Above all, the actions of the individual must not be detrimental to the whole group scheme, particularly if medical insurance policies are going to be financially sustainable for the company.

When an employee contributes through a small co-payment for by-choice facilities and treatment, it protects the policy going forward. The table of benefits will not be diluted, allowing the company and their adviser to continue to ‘level up’ on their insurance and prevention journey in their upcoming renewal and beyond.