What is co-pay in a health insurance policy?

by Kiran Jhaa Finance

With health care expenses rapidly increasing in India, buying an insurance cover has now become a necessity more than a need. Moreover, India accounts for over 20% of the global load of diseases along with over 20% of children deaths. With all of this and most importantly, expensive hospital facility and treatments, not everyone can take treatments at swanky hospitals.

In order to reduce this burden, insurers started offering health insurance policy, so that the people can avail the best health treatment in the country. However, the rising health care cost has led to higher health insurance cover costs. Therefore, to cater this rising health insurance costs, insurers have introduced the co-pay element in the health insurance policy plans.

Under a co-pay plan, the policyholder agrees to pay a proportion of the total insurance claim. The co-pay feature was introduced with the cost-benefit logic in mind. Its basic objective was to get more efficient policies by discouraging unnecessary claims. While the proportion of the co-pay lies between 10% and 20%, the policyholder has to pay his/her share and the rest is to be paid by the insurer.

Different types of co-pay in a health insurance policy

Non-network hospital

If one opts for medical treatment outside the network hospital, then a few health insurance plans require the co-pay feature. When taking medical treatments it is always advisable to be very careful while selecting the hospital. If you do not find a network hospital that is nearby, you must first try and contact your insurer before you get hospitalized in a non-network hospital.

Hospitalization is a different city

It is quite apparent that the hospitalization costs in metro cities are comparatively higher than that in smaller cities. While most of the health insurance plans do not require a co-pay feature in case of hospitalization in smaller cities, it is applicable in case of hospitalization in metro cities. In other words, when a policy is purchased in Tier II city and is applied for a claim in Tier I city, the co-pay feature is applicable. However, the policies purchased in Tier I city does not have any co-pay element.

Pre-existing disease

None of the insurance companies cover pre-existing diseases in the health insurance policy till a pre-defined waiting list. Only after the waiting period is over, can the policyholder avail treatment for the existing disease. However, many insurance companies in India offer required treatment only after applying the co-payment feature. This entirely depends upon the insurer if he wants to apply the co-pay or not.

Treatment in expensive hospitals

Even when a hospital is categorized in the network hospitals, some insurers specify certain hospitals as highly expensive and the treatment in such hospitals demand higher co-pay. This is basically because of the higher room rents and surgery charges. This increase in costs can cause a proportional reduction of claims payment. So, as a policyholder, it is always advised to confirm with the insurer about the share of the co-pay before taking any treatment in an expensive hospital.

No doubt, co-pay is a great initiative to save on the premium amount, but one must always check for the pros and cons of individual health covers with the co-pay feature before buying health insurance.