Health insurance is like having a reliable friend who’s always there to help you out when things get tough. Let’s say you’ve chosen a sum insured of Rs 5 Lakhs, thinking it will cover an expensive surgery with a hospital bill of up to that amount. It sounds comforting, right? But the reality is that health insurance isn’t always that straightforward. Have you heard about copayment?
It’s there to catch you when you fall, but sometimes there are smaller nets within the big net, each with its own limits. Most policies come with various limits and clauses that can affect how much you can actually claim. So even if your hospital bill is within your sum insured, you might only get part of it covered. One such restriction is copay.
In this article, let’s get to know the ins and outs of the copay clause in health insurance.
What Is Copay In Health Insurance?
Copay is basically the part of your approved claim that you have to cover yourself, a set percentage. The insurance company takes care of the rest.
For example, let’s say Ravi gets a health insurance policy with a sum insured of Rs 10 Lakhs, and there’s a copay clause of 10%. Ravi has to undergo hospitalisation for a procedure, and the hospital bill comes to Rs 6 lakhs.
There are some deductions for non-medical items, say around Rs 30,000. So, the total amount that needs to be paid to the hospital is Rs 5,70,000. Out of this, Ravi will have to pay 10% of Rs 5,70,000, which is Rs 57,000. The insurance company will then cover the remaining INR 5,13,000.
So, in simple terms, with copay, you’re sharing a bit of the cost with your insurer.
How Does Copay Work?
Health insurance policies usually handle claims in two ways:
- Cashless settlement: If you have a health insurance policy with a cashless treatment option, you can get treated at any network hospital, and the bills are settled directly between the insurer and the hospital. It’s super convenient because you don’t have to worry about paying upfront. However, if your policy has a copay clause, you will need to pay a fixed portion of the approved claim amount to the hospital. The insurance company will cover the rest.
- Reimbursement: Now, if you get treatment at a non-network hospital, things work differently. You’ll have to pay all the expenses yourself initially. After that, you can file a claim for reimbursement. In this case, the insurance company will deduct the copayment amount and any non-payable costs from the total claim value and then pay you the remaining amount.
Types Of Copay In Health Insurance
Here are the 3 main types of copayment in health insurance –
- Age-related Copay: Most insurers include a copay clause in health insurance policies for people over a certain age. This is pretty common with senior citizen health plans, which usually come with mandatory copay clauses.
- Hospital-related Copay: Sometimes, insurers apply a copay clause if you choose to get treated at a non-network hospital. So, if you don’t go to one of the hospitals in their network, you’ll end up paying a bit more out of pocket.
- Location-related Copay: Insurers often have a copay clause for treatments done in hospitals located in metropolitan cities. Since the cost of treatment tends to be higher in big cities, they want you to share part of the expense.
- Illness-related Copay: Some insurers apply a copay clause specifically for treating certain pre-existing diseases or critical illnesses that require costly treatments.
Why Do Insurance Companies Apply Copay Clauses?
Insurance companies have a few reasons for adding copay clauses to their policies –
- Lowers Financial Burden on Insurers: By having policyholders share a portion of the expenses during a claim, insurance companies can lower their overall risks and financial liability. This way, they don’t have to bear the full brunt of the costs.
- Promotes Prudent Policy Usage: Since policyholders need to pay a portion of their medical expenses, it encourages them to use their policies more wisely and fairly. It makes people think twice about when and where they get treated, promoting more responsible use of their health insurance.
- Reduces Risk of Policy Misuse: When policyholders have to cover part of their claims, it reduces the likelihood of people misusing their policies or filing unnecessary claims. Basically, if you have to pay a bit yourself, you’re less likely to claim for every little thing.
- Deters Use of Costly Medical Facilities: With a copay clause, people are less inclined to choose luxury facilities or high-end hospitals for treatment unless it’s really needed, because they know they’ll have to pay a part of the bill.
Does It Help You Save Premiums?
Most senior citizen health insurance plans or policies for people with chronic diseases include a copayment clause to keep the plan affordable. Since you and your insurance company share the hospitalisation costs, policies with a copayment clause usually have lower premiums compared to those without one. This way, you can get coverage without breaking the bank.
Should You Buy A Policy With Copay?
While a policy with a copay can help you save on premiums, keep in mind that you’ll have to pay part of the hospitalisation costs yourself when you make a claim. With medical expenses and inflation rising every year, these copay costs can add up and become tough to handle.
If you don’t have a healthcare fund set aside, these out-of-pocket expenses could really strain your finances. So, it’s best to go for a health insurance policy without a copay if you can. But, if that’s not an option because of your age or health conditions, try to find a policy with the lowest copay possible. This way, you can keep your out-of-pocket costs as low as possible while still getting the coverage you need.
Let’s Wrap Up!
Copay clauses in health insurance can help keep your premiums lower, but they also mean you’ll need to share some of the medical costs when you make a claim. It’s important to understand how different types of copay work and how they can affect your finances. Balancing the need for affordable premiums with the potential out-of-pocket expenses is key to finding the right policy for you. Ultimately, whether you choose a policy with or without a copay depends on your health needs and financial situation
