What are Deductibles, Coinsurance, and Copayment in Health Insurance?

Investing in a health insurance plan does not end the responsibility of the insured. A health insurance plan has many unknown terms, knowing which can help you utilise your plan benefits better. Copay, coinsurance, and deductibles are a few such terms that play an important role during a claim. Although you can refer to the policy document for knowing these terms better, this article will help you understand them in a simplified manner. Let’s begin!

What’s the Difference between Deductibles, Copayment and Coinsurance?

Copayment, coinsurance, and deductibles are primarily the terms of a policy that state the amount of claim that an insured has to bear. On the other hand, it reduces the burden of health insurance premiums as well. Before going into details about deductibles vs copay, the below table will help you quickly grasp an idea about them: 

What are Deductibles?

Deductibles are the fixed amount, as stated in the policy wordings that the insured has to pay when a claim is raised. Once the deductibles are paid, the insurance company starts paying for the rest of the claim amount. You must note that the deductible is a one-time payment amount. Hence, unlike copay and coinsurance, it does not imply all the claims raised in a policy year. Here is an illustration for a better explanation:

Sugandha is a 32-year-old woman working as a banker in Lucknow. She purchased a health insurance plan from Care Health Insurance. As per the agreement, Sugandha agreed to pay ₹5000 as deductibles. After a while, Sugandha suffers an illness for which she needs to raise a claim of ₹50,000. As per the terms, Sugandha paid ₹5000 deductibles. Once the deductibles were cleared, the rest of ₹45,000 were paid by Care Health Insurance.

Next time when Sugandha raises a claim in the same policy year, there shall be no deductibles.

What is Copayment?

Co-pay in medical billing is also the financial contribution made by the insured when a health insurance claim is raised. It may be a fixed amount or a fixed percentage. Here is an illustration to better understand what is copay in  health insurance?

Rishi, a 40-year-old, purchased health insurance with a copayment clause of 10%. Being curious about the term when he asked about what is copay in Care Health Insurance, the insurance expert explained that it is a percentage of a total claim amount to be shared by the insured. After a while, Rishi had to raise a claim of ₹1 lakh for the in-patient hospitalisation expenses. As per the copayment term, Rishi pays 10% of the claim amount, that is, ₹10,000 and the rest of ₹90,000 was paid by the health insurance provider.

Remember that copayment  is applicable for each claim.

What is Coinsurance?

Coinsurance in healthcare is, again, the contribution made by the insured towards the health insurance claim. It is a fixed percentage that has to be paid by the insured/policyholder for each claim. Here is an illustration:

Trisha, a 30-year-old banker, recently invested in health insurance that has a coinsurance clause of 20%. Let's understand what does 20% coinsurance mean here.

After a few months, Trisha met with a minor accident that led to injuries, and she had to raise a claim of ₹50,000 for in-patient hospitalisation. As per the coinsurance clause, she had to pay 20% of the claim, that is, ₹10,000 and the rest of ₹40,000 was paid by the health insurance company.

Coinsurance Vs Copayment

The table below explains in detail about coinsurance vs copay:

Note: Copayment and coinsurance are usually not applied together in a health insurance plan. However, the conditions may differ depending on the health insurance provider and the type of plan you choose.

Things You must Know about Deductibles, Coinsurance, and Copayment

After you know the details of copay vs deductible vs coinsurance, here are a few things that you must know about these terms and their application:

The premium

Deductibles, copay, and coinsurance are all financial commitments made by the insured toward health insurance claims. Hence, with higher deductibles and coinsurance, the health insurance premiums charged are low and vice-versa.

Choose wisely!

Sometimes, higher deductibles, copay, or coinsurance may sound like a good deal in order to lower your health insurance premium. However, be mindful when choosing these. In times of hefty medical bills, a higher share may lead you to pay more and, thus, impact your savings.

Conclusion

It is obvious that a considered amount is to be paid from your pocket during claim if your plan has deductibles, copay or coinsurance clause. However, insurance policies like Care Advantage come with a copayment waiver option, where if the insured person’s age is 61 years or above, by opting co-payment waiver add-on, one can get rid of from 20% copayment. 

So, if you are looking to cover yourself or your family you may invest in Care Health Insurance plans and get great deals. 

>> Also Read: What is Co-pay in Health Insurance?

Disclaimers: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.