What Is Co-payment in Health Insurance?

With medical inflation on the rise, the value of health insurance cannot be underestimated. It protects you in a medical emergency for which you are not financially prepared. Although medical coverage is essential, the true problem arises when making comparisons. Many consumers focus solely on the total sum insured and the premiums, ignoring the most important parameter, co-payment. This article will go over the co-pay in insurance clause in depth.

What is Co-payment in Health Insurance?

Co-payment is the clause in your health insurance plan that specifies the percentage of the claim amount you decide to pay from your pocket. This percentage can be between 10% and 30%, and sometimes even higher if the insurer perceives you as a risky applicant.

To understand how the co-pay clause works, let’s take an example.

Suppose you bought a policy with a sum insured of Rs 15 lakh. Your policy has a co-pay clause of 25%. After a year of buying the healthcare plan, your health deteriorates, and you are diagnosed with a cardiac condition that requires immediate angioplasty. The hospital tells you the cost will be around Rs 4 lakh.

You complete the treatment, and the final invoice is Rs 5 lakh. This is where the co-pay clause kicks in. The insurer will pay Rs 3.75 lakh, and you must pay the rest.

How is Co-payment Different from Deductibles?

While both raise the policyholder’s burden in the event of a medical emergency, they differ from each other. Since we already discussed co-pay in insurance, let’s talk about deductibles.

A deductible is the fixed amount you need to pay for each claim. The downside is if the claim amount is equal to or less than the deductible, your insurer is not responsible for paying anything.

Let’s look at an example.

Suppose you have a policy with a sum insured of Rs 10 lakh and a deductible of Rs 50,000. You fall sick and are admitted to the hospital, and the treatment costs Rs 49,500. In this case, the entire bill obligation will fall upon you. The reason is the treatment amount is less than the deductible amount.

Reasons to Buy Health Insurance with a Co-payment Clause

The following reasons will establish why one should opt for a co-pay clause in health insurance —

• Lower Premium 

Since this provision requires you to share the treatment invoice with the insurer, a higher co-pay reduces the insurer’s responsibility. Given the reduced risk, the insurer levies a lower premium on your profile.

• Discourage from Making Minor Claims

Co-pay helps prevent fraudulent claims, which is beneficial for the insurer. Regarding the insured, this clause restricts you from making unnecessary claims. If you do not make a claim, the insurer rewards you by giving a discount on the premium or raising the coverage amount.

For example, if you have a policy with Rs 10 lakh coverage and do not raise any claims for five successive policy years, the insurer will reward you by raising the sum insured by 50%. That means your new coverage will be Rs 15 lakh.

What Else Do You Need to Check When Buying Health Insurance?

You must check the following criteria when purchasing a healthcare plan —

• Network Hospitals

These are the hospitals that your insurer has collaborated with to provide policyholders like you with cashless treatment. However, you should check whether a network hospital is within 3-5 kilometres of your vicinity. If the hospital is far from your house and you lack financial resources, you may be unable to receive prompt medical attention.

• Claim Settlement Ratio

This ratio indicates the proportion of claims the insurer has settled out of the total number of claims they received in a financial year. With increasing competition, you must prefer those whose claim settlement ratio is over 95%. You can find details on this on the insurer’s website or directly navigate to the IRDAI’s official webpage if you wish to make a comparison.

Step-wise Guide to Raising Claims with a Co-pay Clause?

Step 1: Inform your insurer about the hospitalisation as soon as possible. You can do this via phone, email, or through the insurer’s online portal.

Step 2: Collect all necessary documents from the hospital, such as detailed bills, medical reports, and discharge summaries. 

Step 3: Complete the claim form provided. Attach all the required documents and review the form for errors before submission.

Step 4: Understand the co-pay percentage specified in your policy. Calculate the amount you need to pay out-of-pocket based on the total admissible claim amount. 

Step 5: Submit the claim form. Keep track of your claim status. If additional information is required, provide it promptly to avoid delays.

Step 6: Once your claim is approved, the insurer will settle the bill directly with the hospital if it is a cashless claim. The insurer will pay you the admissible amount minus the co-pay for reimbursement claims.

Conclusion 

When purchasing a health plan, read the fine print in the policy brochure. Choose an insurer with no co-pay clause or one with a low percentage.

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