What is copay in health insurance?
Copay or copayment in health insurance refers to as the percentage of the health insurance claim amount on the medical bills that the policyholder has to pay on their own, while the insurance company settles the rest of the claim amount. However, this copayment option is not mandatory. Some health insurance policies come with mandatory copayment options. While the others have a copayment clause as an option which the policyholder opts according to their needs.
Read: Why health insurance? A complete guide.
Examples of health insurance copay and how copayment works?
Understanding copay in health insurance gets better with an example.
For instance, let us consider Tia opts for a health insurance plan with 20% copay and the sum insurance is 5 lakhs. She goes for a treatment to a hospital and the bills add up to Rs. 50,000. In this case she pays 20% of 50,000 which is Rs.10,000 from her hands. While her health insurance company covers the rest of the bill amount, which is Rs.40,000.
In the above scenario, the sum insured is 5 lakhs and the bills have not crossed the sum insured. But still Tia has to pay the 20% of her bill as she opted for copayment of her bills. Health insurance providers pay the rest 80% of the bill amount. This is how copay in health insurance works.
Types of copay in health insurance - clauses
Let us take a look at the clauses where health insurance copay mostly applies
Senior citizen health insurance policies
The treatment costs for senior citizens are usually higher. Hence, most of the senior citizens’ health insurance policies come with mandatory copay clauses.
Hospitalization in metropolitan cities
The cost of medical treatments in the hospitals in the metropolitan cities are always higher than those hospitals available in small towns and cities. As a result, health insurance companies in India may impose a copay on the hospital bills.
Treatments at Non-network hospitals
At a non-network hospital, the policyholders file for a reimbursement claim. In this case, some insurance providers may impose a co-payment clause during treatment at any non-network hospitals or while filing for a reimbursement claim.
Features of copay in health insurance policies
Here are a few features of a copay option in your health insurance plan.
- When we opt for copay in health insurance, we pay only a percentage of the claim amount. While the insurance company settles the majority of the claim amount.
- The percentage of the copayment depends upon the medical services that we opt during the treatments.
- If we opt for lower percentages of copayment in the health insurance policy then mostly, the premium paid towards the plan gets higher and vice versa.
- Copayment clauses are mostly applicable for senior citizens’ health insurance policies.
Coinsurance vs Copay
Copay is the fixed percentage of the claim amount paid on certain health care services opted during the treatment. The insurance company settles the rest of the bill amount. Whereas, in coinsurance the insurer and the policyholder gets into an agreement where each of them agrees to pay a percentage of the medical bills. Depending on the agreement opted, the percentage can vary as 90-10, 80-20, 70-30 etc. Here, the insurer's contribution is mentioned first and the policyholders' contribution is mentioned next.
However, in India, all major insurance policy providers use the term coinsurance and copay interchangeably to mean about sharing of liability and risk.
Deductible vs Copay
Deductible is the fixed amount the policyholder pays every year even before the health insurance policy begins covering their medical expenses. Deductibles permit the policyholders to pay lesser premium amounts.
On the other hand in copay the policyholders pay the fixed percentage of the total medical bill while opting for certain health care services and the insurer covers the rest. In copay the premium amount can get lesser only if the policyholder opts for larger copay amounts.
Advantages and disadvantages of copay
The advantages and disadvantages of copay revolves mostly around the premiums paid.
Advantages of copay
- By opting for higher copay percentages, you can reduce the monthly premium paid towards your health insurance plan. This largely reduces a burden on your shoulders.
- With a copay clause in place, the policyholder will pay a part of the bill. This means they will not raise claims for every other medical treatment he/she takes. This leads to an increase in the judicious and honest use of health insurance policies.
Disadvantages of copay
- Even though the insured pays a lesser monthly premium, with a copay option, the policyholder will end up paying more towards the medical expenses.
- By opting for a copay in health insurance, a policyholder will have to think twice about undergoing a costly medical treatment. Why? Because it is evident that without paying a fair percentage of the bill, one cannot put the health insurance policy into proper use.
Read: Calculate health insurance premium
Things to keep in mind before opting for copay in health insurance
- The health insurance policies that come with copay clauses are affordable but always keep in mind to understand your coverage requirements before opting for this option.
- Also, it is important to check for the finances and keep it ready before hospitalization as you will pay a percentage of your medical bills when you opt for a copay option.
- If you are a healthy person with no history of medical illness, then the copayment option can save you some money as you will pay a lesser health insurance premium.
Hence, always consider your medical condition before you opt for a copay option in your health insurance policy.
However, if you are a person with a history of illness, then it is always better to go with a regular health insurance policy.
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