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A co-payment in health insurance is a fixed percentage of the amount a policyholder pays out-of-pocket toward hospitalisation expenses, and the insurer pays the rest on every claim.
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A copay in health insurance is the percentage of the claim amount that a policyholder pays out of pocket for every claim. The insurer pays the remaining amount in accordance with the policy terms and conditions.
Copayment in health insurance applies whenever you file for a claim for medical services that require you to pay a fixed percentage of the amount out-of-pocket. Here are certain scenarios where it can apply:
Generally, there are two broad types of copayment in health insurance:
This type of copayment is a fixed percentage that the policyholder must pay for each claim, as per the policy terms and conditions.
Example:
If your policy has a 30% mandatory copayment and the approved claim amount is ₹1,00,000, you must pay ₹20,000, and the insurer will cover ₹80,000.
This type of copayment is an optional clause that the policyholder chooses when purchasing the policy. It is suitable for individuals seeking to reduce their annual premiums.
Example:
If you opt for a 10% voluntary copay and your claim amount is ₹50,000, you will pay ₹5,000, and the insurer will pay ₹45,000.
Copayment in health insurance is calculated by multiplying the total admissible medical expenses by the fixed copay percentage specified in your policy. Here’s the formula:
Co-payment = (Approved Claim Amount × Co-payment %)
Example: 10% co-payment
Hospital bill: ₹2,00,000
Co-payment: 10%
Your share: ₹2,00,000 × 10% = ₹20,000
Insurer will pay: ₹1,80,000
Here are some primary features of co-payment in health insurance:
>> Read More: Copayment vs Co-Insurance vs Deductible
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Here are some solid reasons for choosing a health insurance plan with a co-payment:
A co-payment clause directly impacts your health insurance premium. Generally, a higher copayment percentage results in a lower premium. By agreeing to pay a fixed percentage of the claim amount, you reduce the insurer’s risk, allowing you to pay less upfront charges. On the contrary, plans with no co-payment have higher premiums, as the insurer bears a greater share of medical expenses.
Here are the pros and cons of the copayment clause that you must know before purchasing the policy:
Copays and deductibles are key features of health insurance plans, and policyholders should have a clear understanding of them before finalising the purchase. The table below describes the difference between the two:
| Aspect | Deductible | Copay |
|---|---|---|
| Definition | A fixed amount that the insured must pay before the insurer starts covering medical expenses. | A fixed percentage of every medical bill the insured must pay when availing medical services. |
| Payment Frequency | Paid once per policy period or per claim, depending on the policy terms. | Paid every time medical services are availed, as per the policy terms. |
| Example | If the deductible is Rs 10,000 and the claim is Rs 50,000, the insured pays Rs 10,000; the insurer pays Rs 40,000 | If the copay is 20%, and the medical bill is Rs 10,000, the insured pays Rs 2,000 each time. |
| Application | Applies to the total claim amount. The insurer covers expenses after the deductible is met. | Applies to each medical service or bill separately, irrespective of the total claim amount. |
| Role in Insurance | Often seen in super top-up plans, reduces premium costs by shifting initial costs to the insured. | Common in health insurance plans to share costs between the insurer and the insured. |
Health Insurance is a shield that protects you and your loved ones in cases of medical emergencies.
A right health insurance plan makes sure that financial crisis is not an issue during a medical emergency.
With the skyrocketing cost of healthcare in the country, opting for a good health Insurance Plan is a smart decision for the safety of the individual and family as a whole.
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Yes, generally opting for a higher copayment percentage leads to a lower premium.
Yes, if your policy includes a copayment clause, it applies to every claim as per policy terms and conditions.
Copayment can be beneficial if you want to reduce premiums and are comfortable sharing a portion of medical expenses.
Copayment is calculated on the approved claim amount, not on the total hospital bill. If certain expenses are not covered under the policy, those will be excluded first, and a copayment applies on the admissible amount.
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