health copay

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Health insurance co-pay:
meaning and definition

Health insurance is crucial for everyone to tackle unforeseen medical expenses. However, with continually rising medical inflation and sky-rocketing healthcare costs, comprehensive health insurance coverage can be expensive too.

To make it more affordable, insurance companies offer a co-payment facility. It is an arrangement whereby you agree to bear a specific portion of your medical expenses out of pocket. By opting for a higher co-pay, you can significantly reduce your Health insurance premiums.

What is co-pay in health insurance?

Simply put, health insurance co-pay is the fixed percentage of the claim amount that the policyholder pays. The insurer pays the rest as per policy terms and conditions.

For example, if your payable claim amount is ₹2 lakhs and your policy has a co-pay clause of 10%, the insurer will pay ₹1.8 lakh minus non-payable costs, while you will have to bear the remaining amount on your own.

While some health insurance policies come with a mandatory co-payment clause, others leave it to the policyholders to decide if they want to opt for it.

How does co-pay work?

Usually, health insurance policies pay the claim amount in two different ways:

A
Cashless settlement

Under a health insurance policy with a cashless treatment facility, you can undergo treatment at any network hospital, and the bills are settled directly between the insurer and the hospital. In the case of a co-pay clause, the policyholder must pay a fixed portion of the approved claim amount to the hospital while the insurer pays the remaining amount.

B
Reimbursement to the policyholder

In case you have taken the treatment at a non-network hospital, you have to pay the expenses out of pocket. You then file a claim for reimbursement. In such a case, the insurance company deducts the co-payment amount (along with the non-payable costs) from the actual claim value and pays out the remaining amount.

Features and benefits of health insurance co-pay with ICICI Lombard

With ICICI Lombard's health insurance, you have the flexibility to choose between no co-pay and 5% co-pay plans, as per your requirements.

Below are the salient features and benefits of our co-pay health insurance policies:

You will have to bear a pre-determined percentage of the covered medical expenses you incur.

We fix the co-pay percentage at the time of policy purchase, and it remains constant throughout the policy tenure.

For all eligible claims, we will pay a major chunk of the claim amount, and you will have to bear only a small portion of it.

You can reduce your health insurance premiums to a certain extent by opting for a co-pay clause.

Types of co-pay clauses in health insurance

Not all health insurance policies come with a mandatory co-payment clause. Different insurers may apply co-pay condition in different ways for various circumstances. The table below depicts the different types of co-pay clauses and the scenarios in which they are applicable:

Type of co-pay Applicability
Age-related co-pay Most of the insurers levy the co-pay clause on health insurance policies for people beyond a certain age. Typically, senior citizen health plans come with mandatory co-pay clauses.
Hospital related co-pay Sometimes, insurers levy co-pay clauses only if the policyholder chooses a non-network hospital for his/her treatment.
Location-related co-pay Usually, insurers levy co-pay clauses on treatment taken at hospitals situated in a metropolitan city. It's because the cost of treatment is usually higher in such cities.
Illness related co-pay Insurers may choose to levy co-pay clause only to treat certain pre-existing diseases and critical illnesses that require expensive treatment

Why insurance companies levy co-pay clauses on policyholders?

Apart from helping the policyholders reduce their health insurance premiums, insurance companies have some additional reasons to levy co-pay clauses on their policies.

Reduces their overall financial liability

By saving a portion of their expenses during a claim, the insurance companies can reduce their overall risks and financial liability towards the policyholders.

Prevents misuse of policies

Since the policyholders must bear a portion of their claims, the chances of misusing policies or filing unnecessary claims reduces.

Discourages people from going to expensive hospitals unless it's necessary

People with co-pay health cover may not opt for luxury facilities and expensive hospitals for treatment, since they need to pay a portion of their medical expenses.

Promotes fair and judicious use of policies

Since the co-payment clause requires the policyholders to own a portion of their medical expenses, it promotes fair and judicious usage of the policies on their part.

Should you opt for a policy with co-pay?

Learn about the advantages and disadvantages of opting for co-pay and make an informed choice.

1
Advantages of co-pay

The most notable advantage of health insurance co-pay is that it helps the policyholders reduce their overall premium outgo. Even though they might have to bear a portion of the medical expenses in case of a claim, co-pay in health insurance is beneficial to those who want lower premiums.

2
Disadvantages of co-pay

Although the co-pay clause in health insurance helps reduce premiums for the policy, there are certain disadvantages to it. The most remarkable of them is that if the claim amount is too high, the policyholder may end up paying a hefty sum of money out of pocket in a medical emergency.

3
How does co-pay affect insurance premiums?

The co-pay clause in a health insurance policy is inversely proportional to its premiums. It means that when you opt for a higher co-pay, it will reduce your overall insurance premiums, but you will have to pay a more considerable amount during a claim. On the other hand, opting for a lower co-pay will increase your insurance premiums, but it will reduce the amount you need to pay at the time of a claim.

Things you should consider before opting for health insurance with co-pay clause

  • Your current financial situation

    The primary reason you're buying a health insurance plan is to safeguard your savings against unforeseen medical expenditures. Therefore, you should ensure that you have adequate finances to pay your share of healthcare expenses before opting for a health insurance policy with a co-pay clause.

  • Your current health conditions

    If you're currently in the pink of your health with no pre-existing ailments, opting for a health insurance policy with a co-pay clause could turn out to be beneficial for you. On the other hand, if you're susceptible to illnesses, you must go for a health plan without the co-pay clause.

ICICI Lombard's Health Insurance provide the flexibility to choose between no co-pay and 5% co-pay plans, as per your requirements.

Frequently asked questions on co-pay in health insurance

What is co-payment in health insurance?

 

Co-pay in health insurance is a clause, wherein the insured agrees to bear a specific portion of the incurred medical expenses. It is usually a fixed percentage of the claim amount, which the policyholder pays at the time of a claim.

Why do people choose co-pay in health insurance?

 

Opting for co-pay health insurance helps the policyholders to reduce their premium outgo for the policy. Even though they might have to bear a portion of the claim amount themselves, co-pay in health insurance can prove beneficial in the long run by significantly lowering the premium amount.

How do I know my co-payment liability at the time of claim settlement?

 

To know your co-payment liability at the time of claim settlement, you can refer to your policy document. It contains all the details regarding the policy's co-payment clause, including the percentage at which it is levied, whether you're required to pay it or not, etc.

Is co-pay levied on cashless hospitalisation?

 

Policyholders are generally not required to pay anything upfront while availing treatment at a network hospital. At the time of discharge, the policyholder has to pay for his/her share of the expenses as specified in the co-pay clause, along with the non-payables' cost.

Are the policies with co-pay clauses cheaper?

 

Yes. The health insurance policies with co-pay clauses are cheaper as it reduces the financial liability of the insurer. Also, the claim amount is divided between the insurance company and the policyholder, which results in reduced premiums.

Should I take a policy with co-pay?

 

Before opting for a co-payment health insurance policy, you must consider various factors such as your current financial situation and health conditions. You must ensure that you have adequate finances to pay your share of healthcare expenses before buying the policy. Also, if you're healthy and maintain an active lifestyle, opting for a health insurance policy with a co-pay clause could turn out to be beneficial for you. On the other hand, if you're susceptible to illnesses, we recommend going for a health plan without the co-pay clause.