Co-pay, Deductibles and Co-insurance
  • co-pay vs Deductible
  • What is co-pay co-insurance & Deductible
  • Difference b/w co-pay & Deductible
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What do Co-pay, Deductibles, and Co-insurance mean in health insurance?

Today's uncertainty has largely affected human health. As we don't have enough options to avoid medical complications. No matter what, health insurance provides ample protection for your family and loved ones in times of emergency.

However, health plans may not be affordable options as it has preset premium charges. To get maximum benefits from your health insurance policy, you must be aware of co-pay, co-insurance, and deductibles. Read more about these three important clauses and the differences between them in this article.

What does Co-pay in health insurance mean?

co-pay or co-payment refers to a particular percentage of medical expenses the policyholder has to bear at the time of availing a medical treatment. The insurer bears the rest billed amount of overall medical expenses. The amount payable from the insured varies from company to company, depending on the policy.

Types of co-payment

  1. Mandatory co-pay

    • A certain % of the total medical claim (non-removable) is borne by the policyholder
    • It usually sticks to senior citizen plans, such that the cost of a claim on the insurer is controlled and regulated
  2. Voluntary co-pay

    • Gives freedom to opt for a share of expenditure amount according to the policyholder’s flexibility and requirements
  3. Zonal co-pay

    • In tier 1 cities or metropolitan areas, the cost of medical treatment is higher than in semi-urban/tier 2 & 3 cities. Hence a zonal co-payment is applicable
    • If complimented or taken with add-on riders, zonal co-payment rates can be reduced or avoided

What does Deductible mean in health insurance?

Deductibles are the amount paid out of the policyholder's pocket to cover their medical expenses, even before the policy for that year comes into action. The insurer will pay out for a claim only after the deductible limit is exhausted. The policyholder is free to choose the deductible amount.

Types of deductibles

  1. Voluntary deductible

    • The insured has the option to choose a deductible amount/percentage by themselves
    • Insured can opt for this clause as per their affordability to reduce their premiums
  2. Compulsory deductible

    • This is a mandatory deductible where the governing rights belong to an insurer. On each claim made by the insured, they need to pay a fixed amount (applicable beyond deductibles)
  3. Cumulative deductible

    • This kind of deductible works usually withstanding a family floater plan. Each time an insured member of the family makes a claim, they need to pay a deductible amount. But the balance amount on medical bills has to be paid by the insurance company (only if the deductible amount has been utilised)

What does Co-insurance mean in Health Insurance?

Co-insurance is coined as an agreeable amount between the insurance provider and the policyholder just like co-pay. In this scenario, both parties share a specific amount to legitimate it up to 100% mutually which pays off the covered medical bills. But the condition here is, that the policyholder needs to fulfil their deductible limit first.

Types of Co-insurance

  1. 80:20 co-insurance

    • The insurance company is responsible for paying 80% of the medical bills and the rest 20% will be borne by the insured
  2. 30% co-insurance

    • In this kind of co-insurance clause, the insured needs to pay 30% of the total medical bills, and the balance amount will be paid by the insurer

Co-pay vs Deductible in health insurance

Learn the difference between co-pay and deductible in health insurance:

Specifications Co-pay Deductible
How does it work? If a co-pay clause implies on your policy, you will have to bear a specified medical expenses on your own every time you make a claim Even before your policy acts on settling your claim, you need to pay your medical expenses till the limit of your specified deductible amount
Premiums If there’s no co-pay on your policy, the premium payable could be higher It does not directly/indirectly impact your payable premiums
Co-insurance applicability Does not co-exist with the co-payment clause under health insurance It gets activated only after the exhaustion of the deductible limit

Difference between Copay and Coinsurance

Below are the differences between co-pay and co-insurance:-

Specifications Co-pay Co-insurance
How does it work? A fixed or pre-set percentage/amount is payable by the insured and the rest billed amount is on the insurer Same as the co-pay, a definite percentage is paid by the insured and the rest is on your insurer
Condition Insured is accountable for paying on each claim raised in the policy year Only after crossing the preset deductible limit, it’s applicable
Deductible applicability It does not co-exist with a co-payment clause under health insurance If the deductible is exhausted, co-insurance will come into play

Co-insurance vs Deductible in health insurance

Below are the differences between co-insurance and deductibles:-

Specifications Co-insurance Deductible
How does it work? Same as the co-pay, a definite percentage is paid by the insured and the rest is on your insurer Even before your policy acts on settling your claim, you need to pay your medical expenses till the limit of your specified deductible amount
Payment conditions Applicable on every claim raised by the insured Needs to be paid only for a single entry during the policy year
Monetary liability With a frequent claim against the policy, the insured becomes highly accountable for paying more towards their part Being insured, it’s safe to state that you need not pay beyond the limit set for deductibles under the policy

In a Nutshell

Buying a health insurance policy is not simply a chase for your family's protection. Rather it's a way to minimize risks at all levels including financial, whether for a limited period of your life or a lifetime.

Still, thinking of buying a policy but insecure about paying heavy amounts to an insurance company? You need not be worried anymore! Because we've got you covered with the finest and most suitable plans, all according to your requirements.

Reach out to our customer care executives to best understand a plan that caters to all your healthcare requirements.

What are Copay, Deductibles, and Coinsurance?: FAQ's

1. How do we calculate a Copay?

Let's understand this with an example, If you have taken Rupees 5 lakhs as your claim amount and your policy has a clause stating you to pay 10% copay while making a claim. Then the insurer will bear 90% of the medical bills, which means you'll have to pay 50,000 rupees on your claim and the rest 4.5 lakh rupees will be borne by the insurer itself.

2. Is Copay mandatory to opt for while purchasing a policy?

A copay can be a voluntary (depending on the choice of the policyholder) or a mandatory (imposed by the insurance providers) clause depending on the type of your policy, the policy's term, coverage amount, etc.

3. Why is the concept of deductibles up in health insurance?

There are three reasons to impose a deductible clause- in order to eliminate unnecessary or minor claims, help minimize the premiums or to make it more affordable, and to reduce a morale/moral hazard.

4. Who has to pay the deductible amount?

Deductibles in terms of a health insurance policy refer to the amount that a policyholder needs to pay until his/her policy starts paying off any medical bills.

5. Are there any drawbacks of coinsurance?

To get the benefits of coinsurance, the policyholder must require to fulfill his/her deductibles first.

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Simran Nirala

Written By: Simran Nirala

Simran has an experience of 3 years in insurance content writing. She transitioned from hospitality to the insurance industry after her emerging interest in how vast insurance is. With her ability to write complex insurance concepts in a simple, relatable manner she keeps her audience hooked and solves their doubts smoothly.