Copay Meaning & Definition in Health Insurance

Every person wants to avail high-quality medical facilities at affordable rates. But due to the rise in the cost of medical treatments, it has become challenging for people to gain access to such facilities. This, in turn, highlights the importance of having a comprehensive health insurance plan under your name.

Having adequate health coverage protects you and your loved ones against unforeseen medical emergencies. Moreover, your insurer gets you access to high-quality medical services at affordable rates at any of the network hospitals.

However, getting extensive health insurance coverage can be expensive. The premiums charged can be hefty in your pocket. Therefore, insurers offer a facility known as copayment in health insurance, which helps reduce your health insurance premiums. Let us understand what health insurance copayment is in detail.

What is Copay Health Insurance?

Copay in Health Insurance is an amount which is borne by the policyholder. Certain Health Insurance plans offer an option to choose a copay percentage as per their needs, while others come with a mandatory copay clause.

Although opting for a higher copayment and paying your medical expenses from your pocket may not seem like a good idea, a higher copayment will lower your premium payable. On the other hand, opting for a low copay will increase your premium payable, but will reduce the amount that you have to pay in the event of a claim.

How Does Copay Work?

As we know, you can make two types of claims on your health insurance plan: cashless claims or reimbursement of the expenses incurred. When it comes to a cashless claim facility, the insurer settles the medical costs incurred by you or your dependent directly with the hospital. In the case of a reimbursement claim, the insurer will compensate for the expenses incurred once you submit the claim application along with the medical bills.

Now, when you opt for copay in health insurance, you can either –

  • Opt for a higher copayment amount that reduces your overall health insurance premiums. However, you will have to pay that amount when claiming on your health policy.
  • Opt for a lower copayment amount that increases your premiums accordingly. However, you will have to pay a lower copay when claiming on your health plan.

In case you are still confused about how copayment in health insurance works, consider the following example.

For instance, if you have opted for a copay of 20% on your Health Insurance policy and you raise a claim for Rs. 10,000, the insurer will pay only 80% of the claim amount. The remaining 20%, i.e. Rs. 2,000 will need to be borne by you.

Features & Benefits of Copay Health Insurance with Finserv MARKETS

  • If you have chosen a Health Insurance policy with copayment, you will have to bear a certain percentage (pre-determined at the time of policy purchase) of the medical treatments costs covered under your policy.
  • Only a certain portion of the health care expense is paid by the policyholder while the majority is paid for by the insurer.
  • Copay is often used interchangeably with “co-insurance”. However, they mean the same thing in India.
  • Although larger copay percentage works in favour of the insurer, the insured can enjoy lower premiums.
  • Most senior citizen Health Insurance policies in India include the copayment clause.

Why Do Insurers Use The Copay Clause?

  • To avoid fraudulent use of Health Insurance claims
  •  To avoid small or unnecessary claims
  • To encourage discretionary use of Health Insurance
  • To ensure that you become a responsible stakeholder of your health risks

How does Copay Affect Insurance Premiums?

As explained earlier, the higher the copay amount you opt, the lower your health insurance premiums will be. Similarly, the lower the copay amount you choose, the higher your health insurance premiums will be.

Advantages of Health Insurance Copay

One of the primary benefits of health insurance copay is that it lowers your policy premiums. Despite the fact that you might have to pay a portion of the claim amount from your pocket, copay in health insurance reduces your expenditures in the long run.

Disadvantages of Health Insurance Copay

Not every Health Insurance provider may choose to add a copay clause to the policies they sell. This is because there are certain disadvantages for both the insurer and the insured:

  1. In case the copayment percentage is too high, Health policy buyers may be deterred by the high costs they will have to bear as a result of the copayment, thereby rendering the insurance policy completely useless. The need to pay a high amount even after taking up Health Insurance defeats the whole purpose of buying health policy. Hence, many people who cannot afford basic healthcare would be at a huge disadvantage as they will be paying premiums for absolutely no reason.
  2. Generally, Health policies with copay are less likely to be bought. Buyers who understand the concept of copayment prefer to choose a Health Insurance policy which does not have such clauses. Similarly, an insurer who offers to pay for the entire health care treatments will have higher sales simply due to that fact.
  3. While a higher percentage of copayment ultimately lowers the premium, it is only beneficial for you (policyholder) as long as you don’t need to cash in your insurance policy. However, in case you need to claim a high amount of medical expenses, the money you saved on premiums will have to be paid towards the treatment expenses anyway. Also, know about health insurance benefits before you buy the policy.

Difference Between Copay & Deductible

The major difference between copay and deductibles is that copay represents a percentage of the claim amount, whereas the deductible is a fixed amount. Both copayments and deductibles are predetermined before your health insurance commences; however, the copay ratio is laid out in the contract, while the deductible is calculated yearly.

Difference Between Copay & Co-Insurance

Typically, both copay and co-insurance are used interchangeably. However, they do have differences. Under co-insurance, the Health Insurance provider and the policyholder enter into an agreement wherein each party agrees to pay a percentage of the total cost. A co-insurance percentage is denoted as 90-10, 70-30, 80-20, etc. wherein the insurance provider’s contribution is written first, and the policyholder’s contribution is mentioned second. On the other hand, a deductible is a fixed amount paid for different health care services. They are often used interchangeably to indicate the sharing of risk and liability between the insurer and the insured.

Conclusion

Now, even though you might be thinking that copay in health insurance will make the policy affordable for you, you must evaluate your health insurance coverage requirements before you buy the health plan.

Our health insurance plans can be customised to suit yours and your family’s medical needs. You can also use the health insurance calculator to determine the premium applicable on your chosen coverage and add-on benefits. Based on it, if you think you cannot afford the policy at the moment, you can opt to pay the health insurance premiums on EMI at Finserv MARKETS online.

Besides this, the health insurance plans at Finserv MARKETS offer several benefits such as cashless claim settlements, reinstatement benefits, tax benefits, hassle-free renewals, and more. So, don’t wait. Get a health insurance plan with us today!

Best Health Insurance Plans Available at Finserv MARKETS

FAQs On Copay In Health Insurance

  • ✔️What is copay in Health Insurance?

    Copay Health Insurance 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.

  • ✔️Why should I opt for copay under my health insurance plan at Finserv MARKETS?

    By opting for a copayment health insurance policy, you can reduce the burden of large premium payments and secure your policy at cheaper rates.

  • ✔️Why are insurance policies with copay cheaper?

    Copay Health Insurance policies are cheaper as the liability and risk of paying off a claim is divided between both the insurance provider and the policyholder.

  • ✔️Should I take a policy with a copay?

    Before opting for a copay in insurance, you must consider factors such as your past medical history as well as your current state of health. If you are healthy and maintain an active lifestyle with diet and exercise and feel that you may not need to make a Health Insurance claim anytime soon, taking a copay Health Insurance is a good option. On the other hand, if you are susceptible to certain medical conditions or lead an unhealthy lifestyle, it is better to opt for a regular Health Insurance policy.

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