Co-Pay in Health Insurance
Health insurance co-pay refers to an arrangement in which the policyholder will need to pay a portion of the medical expenses on their own and the insurance company will pay the remaining amount. It is carried out with co-pay clauses.
Availing treatment at an affordable rate from medical facilities becomes easy when you have healthcare insurance to cover your financial liabilities. Co-pay is a vital clause and fundamental terminology in health insurance that refers to a fixed percentage of the claim amount that has to be paid by the policyholder.
The percentage of claims under the co-payment system generally varies between 10% to 30%. Here are more details about the types, features, and other details about Co-pay in health insurance.
Types of Co-pay Clause in Health Insurance:
All health insurance does not come with a mandatory co-pay clause. The following are the types of co-pay clauses that may apply to your health insurance depending on various scenarios:
- Medical bills: You need to pay a portion of the claim amount raised irrespective of the voluntary or mandatory co-pay clause applicable under this category.
- Hospitalization in metro cities: Co-pay clause will be levied by the insurance providers on the treatment cost in metro cities.
- Treatment and reimbursement at any network of hospitals: The co-payment clause will be levied by the insurance providers under this category, and cashless claims are only for network hospitals
- Senior citizens: Due to the high treatment cost for senior citizens, a mandatory co-payment clause is applicable for health insurance.
Why is Co-pay Required?
The following are the reasons behind the need to have a co-payment system in health insurance:
- Lower premium cost: Health insurance with a co-payment option reduces the premium cost, thereby distributing the liability between the insurance provider and the policyholder.
- Prevents people from raising unnecessary claims: Co-payment system involves paperwork and documentation; therefore, it discourages people from claiming amounts for minor health issues. This system also prevents people from misusing the insurance policy by claiming minor health problems.
- Helps decide better before seeking expensive healthcare: Regular hospitals charge less for treatment, and as a result, co-pay cost is lower. While multi-specialty hospitals would charge more for the same health issue, and hence, the co-pay cost of treatment will be more than regular hospitals.
Features of Co-pay in Health Insurance
The following are the key features of co-pay in health insurance plan:
Features | Details |
Applied to: | Hospitalization cost, doctor’s visit, medicines, lab test, and others |
Proportion | Only a small proportion of the claim amount paid by policyholder |
Percentage of co-pay | Depends upon the health insurance plan opted by the policyholder |
Premium | Low premium if higher co-payment and vice versa |
Applicability | Clause applicable on higher medical expenses such as senior citizen health insurance plan, or medical treatment in metro cities |
Difference Between Co-pay & Co-insurance
The following are the differences between co-pay and co-insurance:
Differences in: | Co-pay | Co-insurance |
Application | Either a fixed sum or percentage of medical bill is paid by the insured and the rest is borne by the insurer. | A fixed percentage of the medical bill is paid by the insured and the rest is paid by the insured. |
Process | The financial contribution of every medical expense has to be taken up by the insured. | Only after the deductible limit has been reached, the financial contribution needs to be made. |
Deductible | In health insurance policy, co-pay and deductible are not included together. | This is payable after the deductible gets exhausted. |
Types of Co-pay Clause in Health Insurance:
The following are the vital points that should be considered before opting for health insurance with a co-pay:
- Health conditions: If you do not have any pre-existing disease, then you can opt for a policy with a high co-pay to reduce the premium cost.
- Coverage requirements: High co-pay may save you from high premium costs but may not cover specific requirements. Assess the health insurance and consider the coverage requirement before purchasing it.
- Savings: Keep the funds ready for the hospitalisation bills, if you purchase a health insurance plan with a co-pay clause.
- Other factors: Some other factors that need to be considered along with the co-pay are as follows:
- Claim settlement process
- Claim settlement ratio
- Value-added services
- Inclusions and exclusions
FAQs on Co-pay in Health Insurance
- What is co-pay health insurance?
Co-pay health insurance is a type of insurance where a small portion or percentage of the total hospitalization is paid by the insured person, and the insurer covers the major portion.
- Why do people opt for co-pay health insurance?
People opt for such policies as they reduce the burden of large premium payments and are cheaper than other health insurance policies.
- Why are insurance policies with co-pay cheaper?
The risk and liability of paying off a claim is divided between the insurer and the insured, hence the policy is cheaper.
- Should I take a policy with co-pay?
You must consider your present and past medical condition, and physical state, before deciding to take or not to take a co-pay health insurance policy. If you are healthy, maintain a healthy lifestyle with diet and exercise, and do not feel that you may need to cash in your insurance - take a co-pay policy. If you lead an unhealthy lifestyle, have a susceptibility to medical conditions, and feel you may need to cash in your insurance at some point - take a regular health insurance policy.
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