Overview of the Circular Letter
On 19 May 2025, the Financial Services Authority of Indonesia (OJK) issued Circular Letter No. 7/SEOJK.05/2025, setting out a new regulatory framework for the administration of health insurance products. The Circular Letter builds on amendments introduced under POJK No. 36/2024 and marks a significant step in OJK's ongoing efforts to promote sound insurance practices and ensure the long-term viability of the health insurance sector.
The Circular Letter becomes effective on 1 January 2026, with a transitional period allowing existing policies to continue until the end of their term. For products that renew automatically, insurers must ensure compliance by 31 December 2026.
Mandatory Co-Payment Scheme
At the heart of the Circular Letter is the mandatory introduction of a co-payment scheme. From 1 January 2026, all health insurance products must require policyholders to bear at least 10% of the total claim amount. The co-payment is capped at IDR 300,000 for outpatient care and IDR 3,000,000 for inpatient care. Insurers may apply higher caps, provided these are clearly agreed with the policyholder and reflected in the policy terms.
This move is designed to curb overutilization of benefits and promote more responsible healthcare consumption. Importantly, microinsurance products are exempt from the co-payment requirement, reflecting the need for inclusivity and affordability at the lower end of the market.
Stricter Eligibility and Operational Standards for Insurers
The Circular Letter introduces higher operational standards for insurers offering health insurance products. Insurers must now employ medical professionals with doctor-level qualifications to support utilization reviews, have certified health insurance specialists on staff, and establish a Medical Advisory Board (Dewan Penasihat Medis or DPM).
Insurers are also required to implement IT systems that can exchange data with healthcare providers, support utilization review processes, and detect potential fraud. Product design is another area with more structure: a standard waiting period of up to 30 days after policy inception is now required, with the option to extend up to one year for critical or chronic conditions.
Third-Party Administrator and Provider Obligations
The Circular Letter requires insurers to revisit their contractual arrangements with third-party administrators (TPAs), healthcare providers, and digital service vendors. These agreements must now meet specific minimum standards set by OJK, including provisions on data confidentiality, service level expectations, and dispute resolution procedures.
Insurers are now required to maintain comprehensive claim performance databases for a minimum of 10 years following the end of coverage. Quarterly reports to OJK must be submitted starting in Q2 2026, including detailed metrics on claims experience, loss ratios, and other performance indicators.
What Employers Should Do Now
Employers should review their current health insurance arrangements with their insurer or broker to understand how the mandatory co-payment will affect plan design and employee contributions. Companies should also confirm that their insurer meets the new eligibility and operational standards, and that TPA contracts comply with the revised minimum requirements.
Companies with plans structured through Msure can access compliance guidance and plan restructuring support through the employer dashboard. Contact your account manager for specific guidance on aligning your plan with the SEOJK 7/2025 requirements before the 1 January 2026 effective date.