Herbosa: PhilHealth is health insurance, not pension

Health Secretary and Chairperson of the Philippine Health Insurance Corp. Teodoro Herbosa reiterated Friday that the agency “is not a pension.”

In a statement sent to reporters, Herbosa said, “many do not understand the difference between pension and health insurance.”

He further explained the difference between pension insurance and health insurance.

A pension insurance, according to Herbosa, “provides a steady income stream after retirement, ensuring financial stability and security during old age.”

Typically offered by employers or purchased individually, contributions are made during working years; benefits are paid out after retirement, usually as a monthly annuity, and often include survivor benefits and lump-sum payments.

Eligibility is often tied to employment or age; benefits are typically based on salary, years of service, or contributions; contributions may be tax-deductible; benefits are taxed as income; and it offers long-term savings for retirement, providing income replacement.

Health insurance

Health insurance, meanwhile, covers medical expenses, hospitalization, and other healthcare-related costs, protecting against financial strain due to illness or injury.

Health insurance may also offer additional benefits like dental, vision, and wellness programs; premiums are paid monthly or annually; and benefits are paid out when medical services are utilized.

Herbosa further explained that health insurance is generally available to individuals, families, or employees through group plans; benefits are determined by policy terms, coverage limits, and out-of-pocket expenses; premiums may be tax-deductible; and benefits are generally tax-free.

It also offers short-term financial protection against medical expenses.

In the Philippines, the Social Security System and Government Service Insurance System offer pension insurance, while health insurance is provided by PhilHealth and private insurers.

“PhilHealth management [which is distinct from the Board of Directors] has treated the PhilHealth funds like a pension fund,” Herbosa said.

“That’s why their emphasis has been to protect the fund and resist paying the health benefits of its members! We need to fix this broken system.”

Herbosa made the statement amid the budget cut for the state insurer.

Senate Committee on Finance Chair Senator Grace Poe said that PhilHealth will receive no government subsidy for 2025, citing its reserve funds amounting to P600 billion.

PhilHealth, meanwhile, still has a P284 billion Corporate Operating Budget for Fiscal Year 2025.