Health Insurance Jargons Explained: Deductible and Co-pay

As the cost of healthcare services keep rising due to inflation, one can assume to see in the days to come, an increase in the number of people purchasing health insurance online and offline. A health plan helps in coping with the increased cost of healthcare, especially for those who are not able to afford it easily during medical emergencies. If you are buying the plan for the very first time, there are many technical terms that could possibly confuse you. It is better to have prior knowledge of such terms in order to avoid being misled when buying the policy. Two such terms are co-pay and deductible.

Deductible and Co-Pay: What Are They?

Here is all you need to know about deductible and co-pay in health insurance plans for family:

Co-Pay

It is the amount that you, as the policyholder, are required to pay towards the claim settlement of the medical expense; the rest of the claim amount will be settled by the insurer. Generally, the amount of co-pay which you are required to pay will be in the form of a fixed percentage. For example, your co-pay percentage share is 10%. If the cost of the medical treatment is Rs.60,000, your co-pay share will be Rs.6000. The rest of the amount, which is Rs.52,000, will be covered by your insurer. Alternatively, if you and the insurer have agreed upon for the co-pay as a fixed amount, the amount depends on the final amount. A major benefit of co-pay is that it reduces your premium amount significantly. However, this is dependent upon your share of co-pay. A higher co-pay would mean a greater reduction in your premium amount. Opt for a higher co-pay only if you are financially capable.*

Deductible

Deductible is used to define the amount that you are required to pay as the policyholder before your health insurance coverage in India starts to cover the cost of your medical expenses. For example, if you are required to pay Rs.20,000 as a deductible before your policy kicks in, you will be required to pay for any medical treatment that you take. So, if the amount of your treatment is Rs.15,000, you will have to pay that amount out of your pocket. Once you pay for medical expenses amounting to the deductible limit, the insurer will start covering the expenses after that. Just like co-pay, opting for a deductible helps in reducing your premium amount. Make sure you are financially capable of paying for a higher amount of deductible.*

Differences Between Deductible and Co-Pay

As you can observe, both co-pay and deductible are based on the same principle of the policyholder having to pay off some part of the claim settlement. Yet there are some differences the two concepts:

1. Co-pay is generally present in health insurance plans such as senior citizen health plans where the cost of treatment tends to be higher.*
2. Insurance companies have a deductible in their clause to reduce the number of minor claims that policyholders file. The amount of deductible mentioned in the policy deters such policyholders from filing small claims.*
3. Co-payment is applicable each time you file a claim with your insurer, whereas deductible is dependent on the cost of treatment and whether it comes under the deductible limit.*

Benefits of Co-Pay and Deductible

If you opt for co-pay or a deductible when you are buying your policy, you should consider the financial aspect of it. When you choose either of the two concepts and include them in your policy, you shall be able to pay for them. Often times, a reduced premium amount might seem like an incentive worth taking. On the flipside, however, you have to shell out more. Many policyholders opt for a higher co-pay or deductible amount in the beginning of their policy, only for them to have to reduce it later. When looking to purchase health insurance plans for family, it is important to research what the insurer is offering. If either co-pay or deductible is mentioned, check how much your share of it is going to be. If the share of the policyholder is higher, make sure your vital expenses do not get impacted by it. Other things you should check for in an insurer are the claim settlement ratio, network hospitals, and the sum insured limit.

Conclusion

While there are many jargons in health plans, co-pay and deductible are two jargons which you should be aware of, as they impact your decision as a prospective buyer. It would benefit you to learn more about them than buying a policy without proper understanding of these two concepts. You can approach an insurance agent to get more information about them or about the health insurance coverage in India offered by different policies.   *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.