With development, technological growth and access to good medical facilities come longevity of life and extended lifespans. However, on the flip side, the longer people live, the more diseases they live with. Lifestyle diseases like Diabetes, High Cholesterol, Cancer, etc., have become more common but do not worry, as medical advances in the treatment have also improved.
Unfortunately, the cost of medical treatment is something that keeps rising. And with increasing medical expenses, a medical emergency could end up burning a hole in your finances and affecting your savings.
As a result, to access quality healthcare in our country, it is better to get a Health Insurance policy. By purchasing a good Health Insurance policy, you can ensure that you are shielded from the financial troubles resulting from unexpected medical emergencies.
Let us say you have purchased a Health Insurance policy, when you visit the hospital, you are examined, given medical attention and a bill. Usually, your Health Insurance Company will cover every cost as per the terms of your policy, and you will leave the hospital feeling better and almost have the same amount of money as when you entered.
Co-pay - An outline
Co-payment refers to the percentage of the medical expense that a policyholder must cover when receiving medical treatment. The Insurance Company covers the remaining balance.
Only a few Insurance policies have a mandatory Co-payment clause, while others provide policyholders with the choice of a voluntary Co-payment, allowing them to pay lower Premiums.
Say, for instance, Hema, who is 65 years old, has bought a Star Comprehensive Insurance Policy with a Co-payment option of 10%. After treatment at a hospital, she has received an approved claim of Rs 2 Lakhs. In this case, she has to bear 10% of the expenses, Rs 20,000, and Star Health Insurance will cover the remaining amount.
| Sum Insured | Admissible Claim Amount | Co-payment | Company Payable Amount | Remaining Out-of-Pocket |
| Rs 5 Lakh | Rs 3.5 Lakh | 10% of Rs 3.5 Lakh = Rs 35,000 | Rs 2.65 3.15 Lakh | Rs 35,000 |
| Rs 10 Lakh | Rs 2 Lakh | 10% of Rs 2 Lakh= Rs 20,000 | Rs 1.8 Lakh | Rs 20,000 |
| Rs 15Lakh | Rs 3 Lakh | 10% of Rs 3 Lakh = Rs 30,000 | Rs 2.7 Lakh | Rs 30,000 |
Impact of Co-pay on Health Insurance
The Premium amount depends on the percentage you split with your Insurance. When the Co-pay is higher, your contribution towards the bill is higher, and the Insurance Company will bear the difference amount, excluding the non-payable as per policy terms and conditions. As a result, Insurance Companies incentivise you by lowering the Premiums.
Types of Co-pay
Co-payment is when you must pay a specific percentage of your treatment expenses while the Insurance Company pays the remaining balance.
Entry Age Co-pay: The co-pay is applicable only for persons entering the policy after the specified age as per the terms of the policy opted for.
Compulsory Co-pay: Irrespective of the age group, the insured has to bear the co-payment for each and every claim.
Voluntary Co-pay: To get the benefit of a discount on Premium, the insured will request the Company and opt for the benefit. The insured has to bear the co-pay amount as specified in the policy.
High Co-pay amount
When filing a claim, higher Co-pays will result in reduced Premium payments but higher out-of-pocket costs. This is simple: a high Co-pay means that the insurer and you share the risk.
Low Co-pay amount
If your Co-pay is lower, your annual Premiums will be more, but your out-of-pocket costs for claims will be lower.
Should you buy Health Insurance with a Co-pay?
Policies for older people usually include a Co-payment clause like the Senior Citizens Red Carpet Health Insurance Policy which is a policy for senior citizens aged between 60 to 75 years. This policy has a nominal Co-payment of 30% for all claims.
Conclusion
Although a Co-payment in Health Insurance lowers your Insurance Premiums, it also increases your financial exposure to medical bills. As a result, it's essential to understand the specifics of these concepts and keep them in mind while choosing a Health Insurance policy. Taking a Health Insurance policy at a younger age is beneficial to avoid the burden of Co-payment.
