What is Co-pay in Health Insurance?

With increasing healthcare costs in India, availing a health insurance policy is not just an option but a necessity to seek competent healthcare and treatment. When you have a health insurance policy, you can be sure that you are secured against the financial liabilities that can arise from unexpected medical emergencies.

However, before jumping on the idea of health insurance, it is crucial that you know about the terminologies used, to understand the policy documents and terms of the policy. One such essential terminology is co-pay in health insurance.

What is Co-pay in health insurance?

Co-payment or co-pay in health insurance is a fixed sum set by an insurance policy that is a shared cost for services covered between the insurance policy and the customer. The system of cost-sharing is a significant selling point for each plan as it breaks down how much you’ll actually have to pay for services, medicines, doctor visits etc.

In simple terms, if your health insurance policy has a co-pay clause, you will have to pay a portion of the medical expense out of your pocket, and the insurance company will cover the rest. Many insurance companies today provide the co-pay clause in their policies. Usually, the co-pay amount is fixed for different services it may vary depending on the type of treatment or medication required as per the policy terms.

For example: If your insurance policy has a co-pay clause of 15% and your medical expense has come to Rs.1,00,000, then you will have to pay a sum of Rs.15,000 out of your pocket while the insurance company will cover the remaining Rs.85,000.

What are the key features of Co-Pay Health Insurance?

Let’s understand some of the key features of co-pay in a health insurance policy:

Application:

Typically, the co-pay clause is applied on medical expenses such as cost of hospitalization, consultation fees of the doctor, diagnostic lab tests, medicines, etc.

Impact on insurance premium

The co-pay feature in the health insurance policy impacts the cost of insurance premiums. Higher co-payment leads to lower premiums and the higher amount payable during claim settlement and vice-a-versa.

Percentage

The percentage differs from policy to policy, just like the inclusion of the co-pay clause in the first place.

Proportion

A co-pay clause usually consists of a small portion of the cost-sharing amount during claim settlement which makes the insurance company a major contributor to the claim amount.

What are the benefits of Co-pay?

Since you are familiar with the co-pay and its key features, now let's understand its benefit:

• One of the crucial benefits of co-pay is that it divides the risk between the insurer and the policyholder. While the policyholder only has to bear a minimum amount of the claim amount.
• It helps senior citizens with pre-existing conditions get adequate coverage at lower premiums.
• Co-pay helps reduce the burden of large premium payments on the policyholder by introducing the cost-sharing mechanism.
• Co-pay encourages the policyholders to make only the necessary claims under the health insurance policy and refrain from using unnecessary luxury facilities and hospitals. It also reduces the misuse of health insurance policies.

The above information will help you with a basic understanding of the co-pay. Although, it is absolutely crucial to carefully read and understand the policy documents and the various services offered under the policy while opting for a health insurance plan.

To secure your future from unforeseen medical emergencies, it is advisable to invest in a health insurance policy that would offer you comprehensive coverage and various benefits to ensure your financial security.

For more information, visit the Kotak General Insurance website.

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