Uncovering co-payment in health insurance

Updated on - 23 Oct 2025

Health insurance plans are crucial monetary safety nets for countless families in India these days. Each year, the medical expenses keep on rising, and thus having a good policy will guarantee that you get financial support for the treatment and hospitalisation costs. However, when buying health insurance, it is important to understand certain terms like co-payment, because it helps you fully understand your coverage and make informed decisions.

Let’s know in detail the co-pay in health insurance.

What is a co-pay in health insurance?

The co-pay feature is an optional clause offered by health insurance companies in their policy. It is an arrangement between the policyholder and the insurance company wherein they share the medical expenses based on a mutually decided percentage.

The co-pay percentage is the share of medical expenses that shall be borne by the policyholder in the event of a medical eventuality covered by the policy. For example, Ananya takes a health insurance cover with a co-pay feature of 15%. She incurs a medical bill amounting to Rs. 1 lakh. With the co-pay feature, Ananya will have to pay Rs. 15,000 (1,00,000 x 15%), and the insurance company shall cover the balance.

How does co-payment work?

Co-pay functions in a straightforward manner. All insurance firms add this specific clause to lower their monetary risk and to boost responsible usage of the plan. Here is how the co-payment feature works:

• Step 1: You purchase a health plan with the co-payment clause.
• Step 2: When you get hospitalised, you can raise a claim.
• Step 3: The insurance firm will approve the claim, but apply the co-payment rule.
• Step 4: You pay your share of the bill (10% or 20%), and the insurer will pay the rest.

It’s also crucial to keep in mind that the co-payment is applied whenever you raise a claim and just once.

Types of co-pay in health insurance

Co-payment is not applied in the same manner for all health insurance plans. There are several types of this feature, relying heavily on the policy terms:

• Age-based co-payment: This one is normally applied for all older adults, as the chances of ailments are much higher with age.
• Location-based co-payment: This is applied when you receive treatment in cities, such as Delhi or Mumbai, where the hospital bills are pretty high.
• Voluntary co-payment: When you willingly pick to share a much higher percentage of the medical expense in exchange for lower premiums.
• Illness-specific co-payment: This one applies only to specific conditions or ailments, such as chronic illnesses or cancer.

What is the difference between a co-payment and a deductible?

Many individuals often confuse deductible with co-payment. Both of these features involve out-of-pocket costs, but they are completely different from one another.

While a co-payment is a fixed percentage of each claim that you have to pay, the deductible is a fixed amount that you have to pay just once during a policy year, right before the insurer starts covering the costs.

For instance, suppose your health insurance policy has a co-payment of 10% and a deductible of Rs. 20,000. You have a hospital bill of  Rs. 50,000. First, you pay the deductible of  Rs. 20,000 and the remaining Rs. 30,000 is shared according to the co-payment. With a 10% co-payment, you pay Rs. 3,000, and the insurer pays the remaining Rs. 27,000.

Co-payment is something that is applied to every claim. Deductible, on the other hand, applies only when a specific limit is reached.

What are the benefits of co-pay in health insurance?

Even though you have to pay from your pocket, a co-payment comes with many advantages:

Reduced premium

Co-pay feature provides the insured person with a direct benefit in the form of a reduced premium amount, which is otherwise quite significant. The higher the co-pay percentage, the lower the premium amount.

Direct savings

Health insurance policies are of a pre-determined tenure, and you have to pay the same premium amount every time, irrespective of whether you file a claim or not. With a co-pay, you pay a relatively lower premium amount. If you do not have any claim during the policy period, you have direct savings in the form of a lower premium amount.

What are the disadvantages of opting for co-pay in health insurance?

The co-payment also has some drawbacks, which you need to consider carefully. Some of these include:

• Higher out-of-pocket expenses: In case of a massive hospital bill, your share might turn into a burden.
• Not fit for regular healthcare needs: When you or someone from your family often requires treatment, a co-payment might lead to much higher costs in the long run.
• Uncertainty: It’s not possible to predict how much you have to pay during emergencies.
• Not helpful for older adults: Since senior citizens have a much higher chance of being hospitalised, co-payment can increase their out-of-pocket expenses.

Things to consider before opting for a co-pay in health insurance

Right before you finalise a family health insurance plan with a co-payment, you should keep the following pointers in mind:

• Policy terms: You should read the policy wording to know how much co-payment is needed and when it will be applied.
• Your health and age: If you’re healthy and young, a co-payment might save you money. However, if you or your parents are older, it might cost a lot more.
• Treatment expenses in your area: In all the metro cities, a co-payment might lead to higher spending from your pocket because of expensive medical treatments.
• Your budget: You must always check whether or not you have the funds to pay for your share of the bill during emergencies.

Who should buy health insurance with a co-pay?

Not every individual should opt for the co-payment policy. This is mostly ideal for the following groups:

• Individuals who reside in small towns where treatment expenses are much lower.
• Young professionals who have no primary health problem and want lower premiums.
• Individuals who have a restricted budget and cannot afford high-premium plans but still want a health policy.

For all those individuals who suffer from frequent health issues or are older adults, a no co-payment plan might be a better option despite the higher premiums.

Conclusion

The co-payment in health insurance policies is a helpful feature that can lower the premiums, but it can also increase your part of the medical bills. Right before you opt for a policy with co-payment, you should consider your budget, location, health issues and age properly.

While you make the effort to enhance your health protection with a health insurance plan, allow us to help you in choosing the right policy for you. Receive tailored advice and solutions on health plans by filling out the form provided on this page.

FAQs

• Is the co-payment compulsory in all health policies?

No. Not every health insurance plan needs to have a co-pay. Some provide this as an option, while others make it mandatory, particularly for all the senior citizen policies.

• Is it possible to pick how much co-pay I need?

Yes. In voluntary co-payment, you can pick the percentage you’re comfortable paying. Higher co-payment simply means lower premiums.

• Is co-payment a good option for older adults?

Usually, a co-pay is not a good choice for senior citizens. It’s because they need more regular medical care, and this feature can lead to much higher costs for them.

• Does co-payment affect cashless hospitalisation?

No, you will still receive cashless treatment. However, during discharge, you have to pay your share of the medical bill directly to the hospital.

Disclaimer:

The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis or treatment. Please consult a certified medical and/or nutrition professional for any questions. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.