What Is The Impact Of Copayment In Health Insurance?

Co-payment is an essential concept in health coverage. Opting for this feature can have a great impact on your insurance experience. However, to explore its effects, you will first have to know the meaning of copayment. So, let us first understand what copayment is.

What is Co-Payment?

In health insurance, co-payment is the percentage of the claim amount or medical bill that the policyholder must pay. Some health insurers include a mandatory co-payment clause, whereas, others have made it optional. However, it is advised that policy buyers should go for health insurance companies that provide the flexibility of opting out of it.

The Impact of Co-Payment on Health Insurance Plans

If you choose copay in health insurance, it can have a great impact on your overall health insurance policy. Firstly, it will reduce your premium. And secondly, you will receive a reduced claim amount because you will be taking care of deductibles and your co-payment share. The extent of copayment can go from 5% to 20% of the claim, solely depending on your plan and insurer. The premium amount is inversely proportional to your co-payment limit. So, if you choose a higher copayment, you will enjoy a lower premium. However, you must note that at the time of emergency, you will have to pay for the stipulated percentage out of your own pocket.

For example, let us assume that you have purchased an individual health insurance plan with 10% copayment. Due to a medical emergency, you incur a medical expense of ₹80,000. Now, as per your co-payment percentage, you will have to pay ₹8,000 out of your own pocket.

What are the Features of a Co-Payment Clause?

Here are a few key features of the co-payment clause in health insurance:

• As per the co-pay clause, the major portion of the health insurance claim is covered by the insurer, whereas, the policyholder needs to take care of the remaining amount. The co-pay percentage will be predetermined.
• The percentage of co-payment varies as per the medical service availed by the policyholder.
• If the policy buyer chooses a lower co-payment percentage, they will have to pay a higher premium.
• Co-payment clauses are more popular in metropolitan cities because the treatment costs are higher here as compared to towns and cities.

Factors to Consider While Buying a Health Insurance Policy With Co-Payment Option

Want to opt for copayment? Here’s what you must consider while buying a health insurance plan with the co-payment option:

• Percentage of Co-Payment

The percentage of copayment is the ratio in which you and the insurer will share the burden of paying your medical bills. For instance, suppose your co-payment percentage is 8% and you have raised a reimbursement claim of ₹30,000 against your medical bill, you will pay ₹2,400 out of your own pocket. And the rest of the amount shall be paid by your insurance company. Hence, ascertain that you check the percentage of copayment mentioned in the terms and conditions before buying a plan. 

• Premium Amount

Most health insurance plans that feature the co-payment option will charge lower premiums. It is best to compare general health insurance plans with the one that has the co-pay clause. If there is not much difference or very little difference between the two, it would be ideal to go for a plan without the co-payment option.

Why Don’t All Insurance Companies Offer the Co-Payment Option?

There are multiple health insurance providers that don’t offer the co-payment clauses in their healthcare plans. Here are a few reasons why:

• If the co-payment clause is extremely high, there are chances that the insurance holder might avoid raising a claim even against life-saving medical attention and care. This fails the whole purpose of buying a health insurance policy. A lot of people might opt for a higher copayment simply for a lower premium and not because they are financially stable to bear a high percentage of medical bills. Moreover, making it compulsory wouldn’t be fair towards people who cannot afford to pay high medical bills.
• Health insurance penetration in India is already low as compared to most countries. So, when people see complex clauses like coinsurance and copayment, they are sure to stay away from it. People are looking for health insurance plans that offer full coverage against healthcare expenses without any kind of cost-sharing clauses.

Though medical insurance plans with the co-payment option are more feasible to buy, you will be paying your share of money during medical emergencies which might extinguish your emergency fund. Even if you wish to choose copayment, see that you opt for a plan with a lower co-payment ratio, where you have to pay only a minimal amount.