What is Copay in Health
Insurance
  • Copay Clauses in Health Insurance
  • Voluntary Deductible vs. Copay
  • Features of Copay
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Copay in Health Insurance

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.

What is Copay in Health Insurance?

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.

Meaning of Copay

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.

Is Copay Compulsory?

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.

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Copay Percentage

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.

Voluntary Deductible vs. Copay

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.

Impact of Copay in Health Insurance Premium Amount

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.

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High Copay vs Low Copay Amount

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.

Features of Copay Health Insurance Policy

To understand what is copay in health insurance, you must understand its features. The following are some of its features:

  • Major part of the claim will be paid by the insurance company.
  • It applies to all medical services.
  • For a low copay percentage, you have to pay higher monthly premiums.
  • It generally applies to senior citizens health insurance plans.

Types of Copay in Health Insurance

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:

Copay ClauseApplicability
Clause Based on Medical BillsThe 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 PoliciesThese 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 HospitalsInsurance companies impose a copayment clause on reimbursement claims or treatment at non-network hospitals
For Hospitalization in Metro CitiesTreatment expenses in metro areas are higher than in smaller towns and cities, insurance companies may levy a copay clause in such cases.

Why do Insurance Companies levy Copay Clauses on policyholders?

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:

  • Stopping the misuse of the policy

    Insurance companies include a copay clause in their contracts to prevent policyholders from filing needless claims.

  • Encourages honest insurance policy use

    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.

  • Mitigates the risks of insurance providers

    Insurance companies are not required to pay the full amount of a claim under the co-payment clause.

Things to be Consider Before Opting for Health Insurance with Copay Clause

Consider these factors before buying the policy with a high copay clause.

  • Coverage Requirements

    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.

  • Savings

    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.

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What is Copay in Health Insurance: FAQs

1. How can I know the copay percentage in my policy?

Carefully read the policy documents where all the terms and conditions are mentioned like inclusion, exclusion, copay clause, etc.

2. Why are insurance policies with co-pay cheaper?

It is because the liability and risk of paying the claim are divided between the policyholder and the insurance company.

3. Why do people opt for co-pay health insurance?

People opt for health insurance with a copay clause because it is cheap and reduces the burden of large premium payments.

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Naval Goel is the CEO & founder of PolicyX.com. Naval has an expertise in the insurance sector and has professional experience of more than a decade in the Industry and has worked in companies like AIG, New York doing valuation of insurance subsidiaries. He is also an Associate Member of the Indian Institute of Insurance, Pune. He has been authorized by IRDAI to act as a Principal Officer of PolicyX.com Insurance Web Aggregator.