According to WHO, almost 70% of the Indians spend a huge chunk of their income on healthcare and medicine expenses. These days it is almost impossible for the middle income and the lower-middle-income group to bear the cost of healthcare expenses on their own. This is why it is necessary for people to get health insurance by paying their respective agreed-upon premiums in order to avail financial assistance in case of an accident or any other medical emergencies. It is important to understand what is copay in health insurance in order to opt for the right policy.

What is Copay in Health Insurance?

Nowadays, there are a lot of fraudulent activities related to health insurance. Insurance companies have come up with the concept of Copay in order to dissuade an insured from committing fraud. Copay meaning is simple to explain. Copay is a concept that is agreed upon while signing the insurance contract. The clause states that the insured will have to bear a part or a percentage of the claim amount out of their own pockets and the rest of the claim will be borne by the insurance company. The copay percentage agreed upon by the insured varies from 10-30%.

What is Copay in Health Insurance With Example?

Well, now that you know what the concept of the copay is, you might be able to connect with the concept more when you understand what is copay in health insurance with example. For instance, If your insurance policy includes the copay clause of 20 percent and your medical expenses amount to Rs. 15,00,000, you will have to pay Rs. 3,00,000 out of your own pocket and the insurer, i.e., the insurance company will cover the rest of the Rs. 12,00,000.

How Does Copay Work?

There are two types of claims with any health insurance, namely, cashless health insurance

claims and reimbursement for the expenses incurred. In case of a cashless payment option, the insurer will directly settle your expenses with the hospital. Whereas, in case of a reimbursement claim, the insurer will reimburse all the expenses that you incurred while you were undergoing treatment at the hospital. Now there are two situations that will occur when you opt for a copay option. If you opt for a higher copay, you will have to pay a lower rate of insurance premium as compared to opting for a lower copay, where you will have to pay more premium against your policy.

How is Copay Different from Deductibles?

Both copay and deductibles are cost-sharing mechanisms in health insurance, but they work differently. Copay is a fixed percentage of the claim amount that the policyholder must bear every time they use the policy. Deductibles, on the other hand, refer to a fixed amount the insured pays before the insurer starts covering expenses. For instance, if your policy has a ₹20,000 deductible, any claim below that isn’t paid by the insurer, whereas copay applies irrespective of the claim size. Bajaj Allianz General Insurance Company offers plans with flexible copay options suited to different needs.

Read More: Deductible in Health Insurance Policy: A Complete Guide

Is Copay Mandatory?

Copay is not mandatory in all health insurance plans. It is usually included for senior citizen policies, or when insuring dependent parents, to keep premiums more affordable. Some insurers, like Bajaj Allianz General Insurance Company, allow customers to choose plans with or without copay clauses. However, opting for copay voluntarily can result in lower premium amounts. It’s important to read your policy terms or speak to your insurer to understand whether copay applies to your plan.

Why Do Insurance Companies Have Copay Clauses?

Apart from the main reason, which is to save its expenses during claims, there are a lot of reasons due to which insurance companies have copay clauses.

• To discourage people from unnecessarily going to expensive healthcare centers for their treatments. With copay, the insured will be mindful of their spendings as even they will have to bear a portion of the medical expenses that will occur from these treatments.
• To dissuade people from making unnecessary claims, such as, dermatologist’s appointments, cold, gastric treatments, etc. Copay insurance dissuades insured from misusing their insurance policy.
• To prevent fraudulent behavior amongst the insured.

What are the Disadvantages of Copay?

While a lot of companies opt for the copay clause, there are a lot of insurance companies who choose to not add a copay clause in the insurance policy because of various reasons.

• Instances, where the insured has to pay a high copayment amount, may dissuade the insured from seeking proper healthcare attention when they need it, which defeats the entire purpose of buying an insurance policy.
• While high copayment allows an insured to pay a low premium, the insured will still end up paying more as copayment towards their medical expenses rather than what they’d be saving on the premiums.

People who are well versed with medical insurance products and policies will choose not to buy an insurance policy with the copayment clause as they understand that its disadvantages overpower its advantages.

Why Should You Buy a Health Insurance Plan with a Copay Clause?

Opting for a copay clause can offer significant benefits depending on your health and financial planning:

• Lower Premiums: Policies with copay clauses typically come at a reduced premium cost, which is beneficial for young or healthy individuals who rarely make claims.
• Ideal for Parental Coverage: When insuring elderly parents or dependents, copay helps make premiums manageable while still offering financial support during hospitalisation.
• Prevents Misuse: By sharing the cost burden, copay discourages overuse of health services, helping insurers maintain sustainable pricing.
• Customisable Options: With companies like Bajaj Allianz General Insurance Company, you can opt for health plans that allow partial copay or waive it off entirely based on your preference and budget at any of their 18,400+ partner hospitals.

Always evaluate your medical history, frequency of hospital visits, and financial capability before selecting a plan with a copay clause.

Read More: Coinsurance, Co-pay, and Deductibles: Are They the Same?

Conclusion

Safe to say, now you must have gained some clarity about what copay means! You can now make an informed decision while purchasing a health insurance policy and choose to opt for a copay option knowing all the pros and cons of the concept.

FAQs

Why do people opt for copay health insurance?

People opt for copay health insurance as they have to pay less premium which makes them cheaper than other insurance policies.

Is copayment levied on cashless payment options?

In most cases, copayment clauses are levied only on reimbursement options.

Are the policies with copay clauses cheaper than the rest?

Yes, policies with copay clauses are cheaper than the other claim settlement options as the liability divides between the policyholder and the insurance company. This proves to be beneficial for both parties.

What is the co-payment percentage for dependent parents under the mediclaim policy?

It typically ranges from 10% to 30% depending on the insurer and the parent’s age. Bajaj Allianz offers multiple options based on plan type.

How to know about my Copayment liability at the time of Claim settlement?

Your policy document will mention the copay percentage. You can also check with the insurer or through their app for claim breakdown.

Is Copay levied on Cashless Hospitalisation?

Yes, even during cashless treatment, the applicable copay percentage must be paid by you at the hospital during discharge.

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