Difference between Co-payment and Deductible
Navigating Health Insurance Costs: Understanding Copayments and Deductibles
Are you looking to buy a top Health Insurance policy but need help understanding the technical jargon that comes with it?
Someone without insurance knowledge may quickly become perplexed when dealing with concepts like Co-payment and Deductible.
But fret now; we have got you covered.
This article will cover what Co-payment and Deductibles mean and how they affect Health Insurance policies.
What is a Co-payment?
Co-payment refers to the percentage of the medical expense that a policyholder must pay for every admissible claim, and the Health Insurance Company pays the remaining balance.
For instance, the Co-pay clause in your insurance policy requires you to pay 10% of the entire cost incurred. And the total cost of your medical treatment is Rs. 1 lakh. In this case, you will be required to pay 10%, which is Rs. 10,000 and the Insurance Company will cover the remaining 90% (Rs. 90,000).
What is Deductible in health insurance?
A deductible is a set amount policyholders must pay before their insurance plan starts paying for their medical treatment. The Health Insurance Company chooses whether to charge Deductibles annually or per treatment.
For instance, if your Health Insurance policy mandates a Deductible of Rs. 5000, you will be responsible for paying all treatment costs up to that amount before your insurance policy begins to pay.
Co-payment vs Deductible
| Co-payment | Deductible | |
| Definition | Co-payment is the fixed percentage that policyholders must pay toward their medical costs while the Health Insurance Company covers the balance. It may be given as a fixed amount or percentage of the cost of the treatment. | The Deductible is the amount that policyholders must pay upfront before their insurance policies begin to pay for a more significant share of the medical expenses. |
| Effect on premium | When the Co-payment is higher, the premium amount is lower. | Deductibles also lower the premium amount. |
| Real-life example | Let us assume that the Co-payment is 10% of the policy and that the treatment costs Rs 1 Lakh. In such a case, the policyholder will be responsible for paying Rs. 10,000 of the treatment costs, with the remaining Rs. 90,000 being covered by the Insurance Company. | In this case, let us assume that the Deductible is Rs. 5000, which the policyholder must first pay for his medical treatment. Only after the policyholder has paid their part of Rs. 5000 will the policy cover their medical expenses. |
Copay with deductible meaning
Lets see how Copay and deductible work together. If you have a $2,000 deductible annually and sprain your ankle and require $300 treatment, you must pay the full $300 because you haven't had your deductible yet. When you later have a $500 back treatment, you have to pay the whole $500 again.
If you do break your arm and require a $3,500 hospital visit, you must pay $1,200, which is the cost amount left of your deductible. You must also pay 20% coinsurance, which is $300 (20% of $1,500, the difference between the deductible and the hospital visit).
Copay vs coinsurance
Copays and coinsurance are the kinds of cost-sharing in health insurance, but they vary in the way they are calculated and when they apply. A copay is an amount that a policyholder pays for a particular service covered by their health insurance, while coinsurance refers to a percentage of the cost of a service.
Difference between deductible and out-of-pocket maximum
A deductible is the amount you pay prior to your health insurance begins covering costs. At the same time, an out-of-pocket maximum refers to the total amount you pay for covered services before your health insurance covers 100%.
Conclusion
Your premium payment will be lowered if you choose a policy with such cost-sharing terms. Every time a medical emergency occurs, you will be responsible for paying a share of the costs. If you do not have access to quick cash on hand, this could cause problems.
Considerations for the policy should include the number of family members, age and health risks. Star Health Insurance offers an array of Health Insurance Policies allowing you to choose one that best suits your needs.
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FAQ
What is a copay in health insurance with example?
<p>A copay in health insurance refers to a fixed amount that a health insurance policyholder pays for a covered service, particularly at the service time. A copay example is that an insurer may set a copay percentage of 25% for eye cataract surgery.</p>
How to calculate copay and deductible?
<p>Copay in health insurance is calculated by the general formula:</p><p><br>Copay = Copay percentage x Total medical expenses</p><p><br>The formula for calculating a deductible depends on the type of deductible you calculate. To calculate your tax-deductible expenses,</p><p> </p><ul><li>Make a list of all your expenses. </li><li>Add up all those expenses. </li><li>Subtract the total value from your income.</li></ul>
Do you pay copay before deductible is met?
<p>Copays are generally charged after a deductible has already been met.</p>
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