The expense of health care has been rising steadily over the last few years. This makes it difficult for those in the middle and lower-income groups to get good treatment at a reasonable and affordable price. Copay in health insurance is an agreement between the policyholder and the insurer in which the policyholder pays a percentage of their medical bills on their own while the insurance company covers the rest.
You buy a health insurance policy with the common belief that the insurance company will cover 100% of the bill amount. You are unfortunately admitted to the hospital, and the bill is INR 10 lakhs. To notify your insurer about the bill, you file a claim. Then, unexpectedly, something happens. Your insurer informs you that they will only cover 90% of the bill, and you will be responsible for the remaining 10%. That comes to INR 100,000. You're taken aback and inquire of the insurer. They explain that it's a copay clause in the policy paper. It is important to understand the concept of copay in health insurance to avoid such unpleasant situations.
Copay is also known as co-payment in health insurance, it refers to the percentage of the claim amount that you need to pay at the time of claim settlement. You should check the copay clause in the policy documents to determine how much you need to pay during the claim settlement process.
While some health insurance plans require a co-payment, others enable you to choose a voluntary deductible, which lowers your premium amount. To answer this question, copay varies depending on the plan you're considering.
Copays range from 5 to 20%, depending on the insurance company and the health insurance policy you choose.For example, if your policy includes a 10% copay clause, you will be responsible for 10% of the claim amount, while your insurer will be responsible for the remaining 90%. In other words, if your claim is for INR 50,000, you will pay INR 5,000 and Insurer will pay the remaining INR 45,000.
Copay and Voluntary both are different terms. When you make a claim, you are responsible for all deductibles. The insurance company then settles the remaining balance. If your policy includes a copay, the amount will be split between you and your insurer according to the percentage you and your insurer agreed on. The copay percentage is mentioned in the policy documents.
The premium amount is directly affected by the percentage amount you share with your insurance company. When the copay is higher, the insurance company rewards you by decreasing the premium amount of your health insurance.
When the copay is higher it will result in a reduced premium but higher out-of-pocket claims payments. When the copay is low it will result in a higher premium but lower out-of-pocket claims payments.
To understand what is copay in health insurance, you must understand its features. The following are some of its features:
Mandatory copay clauses are not included in all health insurance contracts. If your health insurance policy has a co-pay clause, it can be applied in the following ways:
|Clause Based on Medical Bills||The copay clause applies to all the claims raised, as a result, you will have to be responsible for paying a percentage of the claim amount.|
|Copay Clauses On Senior Citizen Policies||These are the policies that always have a copay clause because the costs of treatment for senior citizens are generally higher.|
|Reimbursement Claims & Treatment at Non-Network Hospitals||Insurance companies impose a copayment clause on reimbursement claims or treatment at non-network hospitals|
|For Hospitalization in Metro Cities||Treatment expenses in metro areas are higher than in smaller towns and cities, insurance companies may levy a copay clause in such cases.|
Apart from the obvious benefit of saving a portion of the insurance company's costs during claims, co-pay clauses are used by insurance companies for the following reasons:
Insurance companies include a copay clause in their contracts to prevent policyholders from filing needless claims.
Co-payment requires you to pay a percentage of your treatment costs from your pocket. As a result, it encourages the policyholder to use the policy responsibly and honestly.
Insurance companies are not required to pay the full amount of a claim under the co-payment clause.
Consider these factors before buying the policy with a high copay clause.
Plans with high copay are less expensive. This means you have to pay a percentage of the total claim amount. So, the plan is affordable does not mean you should buy it without first determining your coverage requirements.
If you are going to buy a health insurance plan with a copay clause then make sure you have enough savings to pay the hospitalization bill if the need arises.