What is Copay in Health Insurance?

Copay in health insurance is the fixed percentage of the health insurance claim that you (the insured) have to pay out of pocket. The rest of the claim amount is paid by the insurance provider. This percentage is pre-decided at the time of purchasing the health insurance policy. Some insurance providers may give you the option to select the percentage of copayment as per your needs, while others may have a mandatory copay clause in their health insurance policy.

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What is Copay in Health Insurance? 

Copay in health insurance is the fixed percentage of the health insurance claim that you (the insured) have to pay out of pocket. The rest of the claim amount is paid by the insurance provider. This percentage is pre-decided at the time of purchasing the health insurance policy. Some insurance providers may give you the option to select the percentage of copayment as per your needs, while others may have a mandatory copay clause in their health insurance policy.

What Should You Consider While Opting for a Health Insurance Plan with Copay?

While a medical insurance plan featuring a copayment clause might sound appealing, you must first take into account what your insurance requirements are. While higher copayment may seem more cost-efficient in terms of premium charged, it is a sum that must be paid prior to your insurer covering the remainder of your healthcare expenses. Owing to this very fact it is vital that you understand whether or not you can afford to pay the portion of the claim over the long run.

More importantly, it is worth understanding that in the event of a medical emergency, copayment mentioned under a health insurance plan does not bring down the financial burden that is associated with healthcare costs. Because of this, it is important to think twice before availing of a health insurance plan that features a copayment clause.

Health insurance plans list on Bajaj Markets with Copayment option

Insurance Plan

Features

Check Plans

Bajaj Allianz Extra Care Plus Policy

1.Top-up health policy that cover higher medical expenses once your core insurance is exhausted.
2. Includes road ambulance cover, free medical check-ups, in-patient hospitalisation and more.

3. Pre- and post-hospitalisation cover of ₹3 Lakhs to ₹50 Lakhs
4. Full copay claims payment done by the insurer

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Aditya Birla Activ Assure Diamond

1.Individual as well as family health insurance plan
2. Sum insured can go up ₹2 crores
3. 10% of sum insured as No Claim Bonus

4. 586-day care treatment cover

5. 150% reload of sum insured
6. Hospitalisation cover of ₹3 Lakhs to ₹50 Lakhs
7. Full copay claims paid by insurer (If age of applicant is more than 60 years then copay is 20%)

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Bajaj Allianz Health Guard Gold

1.Individual and family plan options

2.Covers medical costs with sum insured from ₹2 Lakhs up to ₹1 crore
3. Extensive protection including organ donor expense, in-patient hospitalisation, daycare procedures, etc.
4. Hospitalisation cover of ₹3 Lakhs to ₹50 Lakhs
5. Full copay claims payment done by the insurer

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Impact of Copayments on Health Insurance Premium

Your premium amount for a health insurance policy is directly related to the co-pay percentage amount decided for the policy. Policyholders with a higher copay have to shell out a higher amount, which is why insurers often decrease the premium amount as a perk for such policyholders.

Higher copay amount – A higher co-pay clause means that the risk is divided between your insurer and you as your premium amount for a higher copay is less. However, this also means that you will end up paying more during the claim settlement.

Lesser copay amount – This type of a clause has a higher premium amount that policyholders have to shell out, however, it decreases the actual expense of the insured at the time of claim.

How Copayments in Health Insurance Works? 

When a health insurance policyholder wants to file a claim, they can either ask for (i) reimbursement of their medical expenses or (ii) opt for cashless treatment. 

Reimbursement claim – In this scenario, the concerned health insurance company will reimburse the insured i.e., policyholder for the expenses they incurred in the treatment, hospital, etc.

Cashless claim – In this case, the health insurance company in question will directly settle the medical bills and overall expenses incurred by the policyholder, with the hospital.

Insurers who opt for a lower co-pay plan get a lesser reimbursement during their claim but the premium amount for the insurance policy is higher. On the contrary, if the policyholder has opted for a higher co-payment clause then their premium amount is lower but they end up paying more during the claim settlement. Hence, it is important to gauge your finances, savings, etc., and opt for a co-pay plan accordingly. 

Scope of Copayments in Health Insurance 

While each of us may wish to avail of superior medical services, not all of us have the deep pockets needed to foot the bills. Comprehensive health insurance plans allow you to avail of such services without overextending yourself. By purchasing the appropriate health insurance plan, you can gain access to superior medical services at affordable prices at hospitals listed in your insurer’s network. 

Purchasing such plans can cost you a pretty penny in the form of a hefty premium. It is possible to bring down the cost of these premiums by taking advantage of the copayment facility offered under health insurance plans. However, just like in every insurance plan, it is crucial to understand the terms of a copayment insurance plan and then make a decision.

  • Copayment refers to the percentage of the total medical expense borne by you, the policyholder. The remainder of the amount is covered by the insurer. 

  • Some insurance companies allow the policyholders to customise their co-payment plan by selecting the percentage of copay that suits their needs. However, some insurance companies also have a mandatory clause of copay attached to the policy by default.

To better understand the copay concept, consider the following example - Let us assume that your health insurance policy has a copay clause of 10 percent. Your medical bill at the hospital amounts to ₹60,000. This means that you will need to pay ₹6,000 with your own money while your insurer will pay the remainder i.e., ₹54,000.

While you may think opting for a higher copayment is disadvantageous, the benefit of doing so is paying a lower premium. On the flip side, by opting for a low copayment plan, the out-of-pocket expense will be lower, but the premium for your plan will be higher.

Types of Copay Clauses in Health Insurance

To understand the different types of co-pay available under health insurance plans, consider the table mentioned below. Different health insurance providers apply the copay clause in any one of these ways.

Type of Copay

Applicability

For Healthcare Expenses


This copay clause comes into effect when you raise a claim toward your medical expenses or bills regardless of whether these expenses are voluntary or not. This means that you are liable to pay a portion of the claim that’s been raised while your insurer will pay the rest.


On Hospitalisation

In case you are hospitalised in a metropolitan city, you will need to pay a portion of the claim. This is because hospitalisation in metros is more expensive in comparison to smaller cities.

On Senior Citizen Health Plans

This kind of clause is usually mandatory in medical insurance plans as the costs associated with healthcare for senior citizens is more expensive than younger individuals.

On Reimbursement Claims

Certain health insurance plans come with a copay clause to reimbursement claims. This clause comes into effect when a claim is made toward a hospital that isn’t listed in your insurer’s network.

 

It is important to be aware of the terms and conditions of your health insurance policy so that avail of the copay clause in the aforementioned scenarios.

Features of Health Insurance Copay with Bajaj Markets

The Bajaj Markets website is a great place to purchase a health insurance plan for yourself. To better understand copayment and its features, consider the points mentioned below –

  • When you purchase a health insurance plan that includes copayment, the copayment percentage is pre-determined at the time of purchase.

  • Next, you are required to pay a fraction of the healthcare expenditure and the remainder will be covered by your insurer.

  • While the term “copay” might be used interchangeably with “co-insurance”, the two terms do not mean the same thing in India.

  • While larger copay percentages favour insurers, insured individuals can use them to take advantage of lower premiums.

  • A large number of senior citizen health insurance policies available in India feature a copayment clause.

Advantages & Disadvantages of Copayments

Examine the table below to understand the advantages and disadvantages associated with the copayment clause.

Area of Consideration

Advantage of the Copayment Clause

Disadvantage of the Copayment Clause

Premium

By choosing a policy that includes a copayment clause you can decrease the cost of your policy’s premium. While you need to pay a portion of your claim, your overall insurance cost may reduce on account of the lower premium payments.

Health insurance policies that have high copayment percentages could deter insured individuals from seeking adequate healthcare.

If you need to pay a high medical bill even after claiming health insurance, the purpose of health insurance is defeated. Individuals unable to pay for basic healthcare are particularly disadvantaged in such a scenario as they would be paying premiums for no reason.


Additional disadvantages associated with copayments are as follows:

1. People Prefer Health Insurance Plans Without Co-payments

Health insurance policies featuring copayment clauses tend to be bought with far less frequency than those without. This happens because buyers who comprehend what this clause entails prefer availing of health insurance policies that aren’t tethered to it. This means that health insurers who are willing to cover healthcare treatments in their entirety are likely to have greater sales.

2. Co-payments Drain your Savings

While it is true that by paying a higher percentage of copayment you have a lower premium to pay, this only benefits you, as long as you don’t need to cash in your insurance plan. In the event that you put in a claim on a significant medical expense, you may have to direct the money you saved on your premiums toward the copayment. This means that as a policyholder you will need to part with your money in one way or another.

3. Amount Saved vs. Amount Spent

While higher copayments imply lower premiums, in the event that you avail of medical treatment and file a claim, your treatment expenses may be more than the amount you saved while paying a lower premium.

Why do Insurers Use the Copay Clause?

Listed below are some of the many reasons why the copay clause is popular among insurers who frequently include them in health insurance plans.

1. Fraudulent Claims are Kept at Bay

Policyholders are less likely to make fraudulent health insurance claims when copayment clauses are included in their health insurance plans. This is because they too must shoulder the burden of payment with their health insurance provider.

2. Deters Unnecessary Claims

Unnecessary or minor claims pertaining to illnesses like coughs and colds aren’t likely to be made by a policyholder due to the copayment clause. If such a clause didn’t exist, the insurer would need to finance the entire expense associated with treating a common or minor ailment.

3. Helps Encourage Discretionary Insurance Usage

Since policyholders must pay a portion of their claim, they will use their health insurance plan with caution. This clause dissuades policyholders from availing of expensive healthcare services that can rack up the bill unnecessarily.

4. Creates a Sense of Responsibility in the Policyholder

With an active copayment clause, health insurance policyholders are more responsible with their health and are wary of the risks associated with being unhealthy.

5. Helps Mitigate Financial Risks

Insurers often use the copayment clause to mitigate the financial burden by sharing the responsibility of paying insurance claims.

Difference Between Copay, Deductible and Co-Insurance

While the terms “copayment”, “deductible” and “co-insurance” are used interchangeably, there exist stark differences between them. Take a look at their definitions to understand exactly what each term means.

  • Copayment

This clause states that you will bear a portion of your medical expenditure each time you avail of any medical service and claim for it. This amount may either be fixed or can be a fixed percentage of the treatment costs.

  • Deductible

This term refers to the fixed amount that is paid for different healthcare services.

  • Co-insurance

Here, the health insurance provider and the policyholder agree to pay a percentage of the total cost of a medical expense. The co-insurance percentage is denoted in the form of two numbers separated by a dash such as 70-30, 85-15 and so on wherein the contribution made by the insurance provider is mentioned before the dash while the policyholder’s contribution is mentioned after the dash. In contrast to copayments, the co-insurance clause requires you to pay the percentage after you have paid the deductible applicable to your policy.

Why don't all Insurances Companies Offer Copay Clause?

While a lot of insurance companies offer the copay clause with health insurance plans, there are many that don’t prefer this clause. Here is a general consensus of how insurance buyers feel about co-payment clauses, which could be the reason why insurance companies keep co-payment clause out of their policy offerings – 

  • Generally, health insurance buyers prefer policies that offer complete protection and cover towards all healthcare expenses. This is why the cost-sharing plan offered by co-pay clause might not be something that interests the insured. 

  • In some cases, the co-payment clause can be very high and that would refrain the insured from claiming the policy as well. This ends up defeating the purpose of having a health insurance cover in the first place as it would mean being as good as uninsured. 

  • Many applicants are unable to afford the hefty healthcare bills and medial expenses, which is why a high co-payment led health insurance policy might not be ideal for them. 

  • Some insurance buyers are even sceptical about opting for a policy that comes with added clauses like co-insurance or copay altogether. 

These copay plans might be very affordable for most insurance buyers, but there are many who would prefer to go for the complete protection plan without cost-sharing clauses. Moreover, it is crucial for insurers to first determine their coverage requirements and understand all clauses before opting for standard insurance or even one with a co-pay clause.

Health Insurance Plans Available at Finserv MARKETS

FAQs on Health Insurance Copay

  • ✔️How will I know about the applicable copayment clause?

    To find out if health insurance copayment is applicable, you can check your insurance policy document for any such clauses and the percentage of copay.

  • ✔️Is copay in medical insurance levied on cashless claims?

    Usually, copay in medical billing is only applicable to reimbursement claims. However, it is recommended to read the fine print to check for any copay clauses in your policy.

  • ✔️What is the meaning of copay in health insurance?

    Health insurance copay is a type of insurance wherein a certain percentage of the total healthcare expenses needs to be borne by the insured person. At the same time, the insurer covers a significant portion. To simplify, the copay definition says that it is a setting in which part payment is made by the policyholder, while the insurance provider makes part payment.

  • ✔️How can I determine what premium will be added to my health insurance plan given the coverage and add-ons I select?

    You can use a health insurance calculator such as the one available on Bajaj Markets in order to determine what premium will be applicable to your health insurance plan given the coverage and add-ons you select.

  • ✔️Are copayment clauses applicable to senior citizen health insurance plans?

    Yes, copayment clauses tend to be applicable to senior citizen health insurance plans.

  • ✔️Are health insurance plans with a copay clause cheaper?

    Yes, ideally health insurance policies that offer a copay clause are cheaper compared to the plans without a copay clause. This is because the liability of claim settlement would be divided between the insurance provider and the insured.

  • ✔️Should we purchase a policy with or without copayments?

    Buying a policy with a copay clause would help you save on the premium amount. Hence, you can consider your current health condition, lifestyle choices and savings before deciding on your health insurance policy. However, if you are financially sound and want to have lesser stress in the future then a health insurance plan without copayments would be an ideal choice.

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