The Concept of Co-Payment and Its Significance in Health Insurance

Health insurance is a tool for every individual to secure oneself and the family against any unforeseen financial crunch that may occur due to a medical emergency. Apart from providing financial security, health insurance also allows an individual access to high-quality healthcare.

However, health insurance costs have seen a rise due to the jump in health care costs and in order to make medical expenses affordable, insurers now also offer the option of co-payment to the insured.

What is a co-payment?

Co-payment or co-pay means sharing the fixed amount of medical expense between the insured person and the insurer. The percentage of co-payment varies from insurer to insurer, however, most of the insurers offer co-payment options.

For instance, an insured person, who bought a health insurance plan for Rs 5 lakh sum insured and opted for 20 percent co-payment, is hospitalised due to road accident and underwent major surgery which costs Rs 2 lakh. In this case, the insured will bear Rs 40,000 (20 percent) and the insurer will pay the rest Rs 1,60,000 (80 percent).

Insurers also apply co-payment conditions in various ways based on types of risks.

Types of co-pay:

Pre existing diseases (PED) related co-pay: Most of the insurers don’t cover PED in the health insurance plans. However, some offer required treatment on co-payment basis. Aditya Birla ABHI STP has 20 percent co-pay applicable on all PED related claims, which will be covered after a waiting period of 4 years. However, in this plan co-pay option is not available for non-PED related claims.

Age related co-pay: Senior citizens are moresusceptible to diseases leading to high premiums for health insurance plans. However, co-pay helps in making insurance plans affordable for senior citizens. Reliance General Insurance’s Reliance Health Gain, Edelweiss General Insurance’s Edelweiss Health Insurance- Silver (Health 241 Add-on) and Religare Health Insurance’s Religare - Care have 20 percent co-payment if the insured is above 60 years. Star Health and Allied Insurance’s Star Health - Star Comprehensive offers 10 percent co-payment if the insured is above 60 years. Cigna TTK Health Insurance’s CignaTTK - ProHealth - Protect also offers 20 percent co-payment if the insured is above 65 years.

Zone related co-pay: As we all know, medical expenses varies from city to city. Medical expenses generally go down as we travel from Tier I to Tier III cities. However, co-pay provides the insured access to quality health care in Tier I city even if the insurance plan is purchased in a smaller city.

Non-network hospital co-pay: All the insurers have their own network of hospitals across the country. Some of the insurers also provide co-pay options if the treatment is done in a non-network hospital.

The benefit of co-payment is that the insured person will be required to pay lesser premium. Higher the co-payment lesser the premium amount and vice-versa. However, it is not the only option to look after while buying health insurance plans. Always compare and select the suitable plan according to your requirements and budget. In case of major treatment, you could end up paying huge amount of money from your own pocket if you opt for co-payment. Industry’s experts suggest to go for top-ups and health riders to bear such major expenses at the time of emergencies.