Numerous diseases, infections, and several other health-related problems are becoming increasingly common. A medical exigency can wipe out your savings and cause financial distress.
Hence, opting for a comprehensive health insurance policy that fits all your healthcare requirements and budget is essential. When you decide to purchase a health insurance policy for yourself, you might come across different terms such as deductibles, copayments, etc. Here, we will try to cover the difference between copayment and deductible so you know how they affect your policy.
Copayment vs Deductible — Which is Better?
So, what is the difference between copay and deductible?
The deductible is a crucial factor in determining when your coverage kicks in. Essentially, it's the threshold your medical expenses must cross before your insurance policy starts paying.
For example, Ms Riya has a health insurance plan with a coverage of INR 2,00,000 and a deductible of INR 15,000. For her to tap into her insurance benefits, her medical costs must surpass INR 15,000.
A copayment is the portion of your claim that you have to cover yourself. This idea stems from sharing the financial load of insurance between you and the insurer. A copay can be a fixed amount or a percentage of your plan's sum insured.
For example, Mr Raj’s health insurance plan has a sum insured of INR 2,00,000 with a 10% copay. If he files a claim for INR 80,000, he’ll need to pay INR 8,000 (i.e., 10% of the claim), and the insurer will cover the remaining INR 72,000.
We will try to bring out the difference between the two in the table below.
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| Criteria |
Copayment |
Deductible |
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Definition
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A copayment is the amount from the insurance claim that you must pay from your pocket.
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A deductible refers to the amount of predefined money that should be exceeded before the health insurance plan becomes usable.
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Form
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Copayments are known as fixed sums of money or a calculated percentage of the sum insured in the policy you have purchased.
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Deductibles are fixed amounts set aside by your health insurance policy.
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Frequency
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Copayment is the amount of money you must pay every time you use your healthcare policy to avail of cashless insurance or a reimbursement claim.
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Deductibles in health insurance are counted for the entire year. If you have reached the maximum deductible limit with your medical expenses for your health insurance policy, you can make a claim without accounting for deductibles for every single claim.
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Scope
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Copayment is an integral part of specific types of healthcare plans such as senior citizen health insurance plans, critical illness insurance plans, etc.
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Deductibles are a part of most healthcare policies to protect insurers against claims for minor expenses.
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The above table clearly illustrates the difference between copay and deductibles. Both of them account for a reduction in healthcare policies. The lower your deductible, the higher your premium will be. Similarly, the higher the copay amount, the lower your premium will be. Understanding the difference between copay and deductible is essential for selecting the right healthcare plan.
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.