Copay In Health Insurance
Health Insurance policies come with dozens of important benefits, and most importantly hundreds of fine print or terms and conditions. Such terms and conditions can impact the benefits you are entitled to end up receiving when there is a claim. One such limitation or condition in health insurance policies you must know is called “copay”
Copay, if not understood well, can result in a big shock at the time of claims.Let’s have a detailed look at what copayment is and how it affects your claim.
What Is Copay In Health Insurance?
When you file a claim, you need to pay a specific percentage of the claim amount yourself, before the insurance company steps in to pay the balance amount. This is known as copay.
For instance, Rohan has a health insurance policy that has a copayment clause of 10%. He gets hospitalised for a gallbladder surgery and his hospital bill comes to around Rs 8 lakhs.
Say his health insurance policy has a sum insured of Rs 5 lakhs, and there were deductions on non-medical items worth Rs 20,000.
So, the total amount payable = 5,00,000 - 20,000 = 4.8 lakhs
Copay = 10% of 4.8 lakhs = 48,000
Total amount Rohan have to pay from his pocket is : Rs. 3,00,000+ Rs. 20,000+ Rs. 48,000 = Rs. 3,68,000
The insurer will pay the rest of the bill i.e. Rs 4,32,000.
Does Copay Reduce Your Premiums?
Yes, copay is usually brought in as a cost-saving mechanism by insurers so that they can make premiums affordable. You will see copay in mostly policies for senior citizens or policies that cover people with chronic diseases. When your health insurance policy includes a copayment clause, it means that you and your insurance company agree to cover hospital costs jointly, i.e., you both accept financial responsibility during claims. Hence, the insurance company offers a discount on the premiums you pay. So, most health insurance policies with a copayment clause have lower premiums.
Let's recall Rohan’s example. Since his policy has a 15% copay clause, his policy may be cheaper than a policy that does not have any copayment clause.
So What Are The Types Of Copayment In Health Insurance?
Copays are of three types -
Some health insurance companies impose a mandatory copayment clause especially for senior citizens. In this case, the amount is fixed.
For instance, Care Insurance charges a 20% copay for health insurance policies purchased by individuals aged over 61.
Note: The percentage of copay may vary from insurer to insurer.
Some insurers allow you to opt for a copay along with your health insurance policy. Due to your voluntary decision to opt for this benefit, the premium you pay will be lesser.
When you undergo an inpatient hospitalisation, you might have to bear a certain percentage of the co-pay as selected by you at the time of purchasing the policy before the insurer pays you the rest.
Insurers may apply zone based copayment clauses, for people who buy policies from Tier 2 or beyond. The copayment limit and the premium discount may vary across cities. A few insurers may apply copay based on the Zone you pay the premiums in and the Zone you get treated in.
For example, the following table talks about the copay applied to Aditya Birla's Activ Health platinum advanced plan for treatment in different zones, for policies with a sum insured of Rs 3 Lakhs and below:
|Paying Premiums In
||Availing Treatment In
Zone II To Zone 1
If you have bought your plan and are paying premiums in Zone II, but need to be treated in Zone I, you will have to pay a 10% copay on your claim amount. The insurer will pay the remaining 90% claim amount.
Zone III To Zone II
If you have purchased your plan and have been paying premiums in Zone III, but wish to get treated in Zone II, you will be responsible for a 15% copay. The insurer will pay the remaining 85 % claim amount.
Zone III To Zone I
If you have bought your plan and are paying premiums for Zone III, but want to get treated in Zone I, a copay of 25% will need to be paid by you. The insurer will pay the remaining 75% claim amount.
In all these cases, the discount on the premiums shall be decided by the insurer.
In Aditya Birla’s Activ Health Platinum, the copay is not applicable for policies with Sum insured 4 Lakhs and above. Please note that different insurers have different clauses.
Things To Keep In Mind About Copay
When your policy has a copay, you will not be getting the entire claim amount as you may have to pay a certain percentage of the approved claim amount.Hence, the copay reduces the claim amount, but not the sum insured.
If you opt for copayment with your health insurance plan, in most cases you won’t be able to remove it later.
In a few policies, accidental hospitalisation may not be subject to the copayment clause.
Buying A Policy With Copays - Worth It?
Buying a policy with a copay will lower your premiums, but remember that you'll be responsible for a portion of hospitalisation costs during claim settlement. And, in the current climate of rising medical inflation and healthcare costs, such copayments might become unaffordable. You may have to run pillar to post to arrange immediate cash. And, without an emergency fund, a copay will drain your wallet and wipe out your savings.
Hence, always look for health insurance plans that don't have copays. Sometimes, you may find it challenging to buy a health insurance policy without a copay because of medical or age-related factors, and so you should choose the policy with the lowest copay.
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Although copay may seem like a good way to reduce your premium, it can burn a big hole in your pocket when you make a claim. Now that you have a clear understanding of what copay means, you can go ahead and decide whether to opt for it or not.
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