What is Co-pay in Health Insurance?

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A percentage of the claim amount, which is to be borne by the insured out of his/her pocket, as per the insurance policy, is termed as Co-pay. For health policy, it may range from 10% to 20%.

Co-pay for health policies can be on account of the following:

  • A general Co-pay: Sharing by the insured, a percentage on all medical bills, regardless of the ailment/illness, treatment is taken or the person treated.
  • Co-pay for parents: Sharing by the insured, a percentage of the claim amount for senior citizen parents insured under family floaters health insurance scheme.
  • Co-pay only for Reimbursement Claims: Sharing by the insured a percentage of bills submitted for reimbursement against OPD or daycare charges only. In such cases, the bills submitted for direct cashless treatments will be processed without any co-pay deduction.

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Co-pay only in case of admissible claims, arising out of admission in Non-Network Hospitals: Similar to the reimbursement claim, but applicable in case you happen to be admitted to a non-network hospital subject to the terms of the policy.

It is important to understand the reason why insurers apply the co-pay clause. Some of them are listed below:

  1. To discourage filing unnecessary or insignificant claim amounts by the insured
  2. To prevent the filing of fraudulent claims
  3. To encourage sensible use of insurance

Is it possible to purchase a health Insurance policy without Co-Pay?

Yes, you can buy health insurance policies without co-pay or voluntary deductible clauses at a substantially high premium. This, however, will depend on the type of policy to be purchased.

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To get clarity on how a Co-Payment Clause works, some examples are given here:

Co-pay of 10%: Mr. X, a senior citizen, who has bought a health insurance policy with a co-pay clause of 10%, goes for bi-annual health a check-up at a reputed hospital. At his age, he maintains good health.

During one of such routine check-up, Mr X was advised to undergo a small treatment/procedure covered under the policy. The cost of such treatment/procedure being INR. 15,000.00 , he would have to pay INR 1500.00 on his account and the balance INR 13,500.00 the insurance company would pay.

Zero Co-Pay: Mr. Y, son of Mr. A, is working with a corporate and is covered by a group health policy bought by the employer, with a zero co-payment clause; i.e. the employees do not have to pay any money out of their pocket for the medical expenses covered under the policy.

Mr. Y had to be hospitalized, for an illness covered by the group policy, in a network hospital listed with the insurance company/Third Party Administrator (TPA) under the cashless treatment scheme and only incurred a cost of INR. 1100 for two days hospitalization, towards the travel and other expenses of caretaker which was not admissible under the policy. The medical bills were paid by the insurance company directly to the network hospital.

Co-Pay clause under Family Floater health policy:

Mr. & Mrs. Z have bought a family floater policy covering their parents, after realizing that the previous senior citizen policy had a very high co-pay of 30% and had a loading of an additional 25% on the premiums. Which meant that for a claim of INR 20,000.00, their parents had to pay INR 6000.00 from their own pocket with an additional premium increase of 25% for the next year’s policy renewal as loading.

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Thus increasing the cost of the policy with each claim, and the parents would also have to pay a large amount out of their own pocket for every bill.

Family floater policy with a lower co-pay clause (10%) and loading (5%), allowed the family to cover the expenses and keep the premiums within limits in case of a claim during the year.

Shailesh Kumar

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