Another crucial difference is that the percentage of co-pay in health insurance is always mentioned in the policy documents, while the deductible sum is calculated every year. The primary difference between the two is that while a co-pay means a fixed percentage of the claim amount, a deductible is the fixed sum/amount to be paid for the claim. One is a co-pay and the other is deductibles. To mitigate the Risks of Insurance Providers - The co-payment clause allows the insurance providers to minimise risks as they do not have to pay 100% of the total claim amount. Therefore, you will rather choose the first option and avoid expensive options to save money.Ĥ. But if you seek the same treatment from an expensive hospital, and your bill comes up to Rs. To encourage consideration of options before seeking healthcare – Since the insurer is required to pay a fixed percentage of treatment costs, their stakes are more, and thus they will think twice before choosing expensive healthcare.įor example, if you have a 10% co-pay clause and you claim a bill of Rs. When one is required to pay a portion, their stakes increase, and thus one would want to raise only honest claims.ģ. To promotes genuine usage of Insurance Policies – The co-pay clause allows the policyholder to make only genuine claims since a percentage of the claim goes from his/her pocket. If a person wants to raise a claim against the treatment of diseases that do not incur high treatment costs, a co-pay helps avoid such claims and prevents misuse of the policy.Ģ. To Prevent the misuse of Policies – By levying a co-pay clause, companies can keep preventing unnecessary claims made by the insurer or policyholder. The primary reason is to save a portion of the cost incurred via claims. There are several reasons why insurance companies impose a co-pay clause. Why do Insurers Apply Co-Pay in Health Insurance? But you end up paying a higher annual premium. However, zero co-pay is also not good, as you will anyway not file a claim for every little treatment expense. Thus, while you can save on your premiums with a higher co-pay, you might end up spending more towards the treatment cost. It may also discourage you to file a claim for day-care treatments which you could claim. Although you must pay a certain percentage of your claim, it lowers the premium of the policy.Ī higher co-pay percentage will increase the pocket cost of hospitalisation and treatment for you. Advantages and Disadvantages of Co-PayĬo-pay clause allows you to pay lower premiums towards your insurance policy. Thus, insurance providers levy a co-pay clause for hospitalisation in metro cities. Generally, the cost of treatment in metropolitan cities is much higher as compared to smaller cities and towns. In such situations, the insurance provider bears the cashless claims. Occasionally, insurance providers impose a co-payment clause only on reimbursement claims or in instances where treatment is taken from a non-network hospital. On Reimbursement and Treatment at Non-Network Hospital: This is because the treatment costs for senior citizens are comparatively much higher. Senior citizen policies usually have a compulsory co-pay clause. The insured needs to pay a portion of the claim amount. There are majorly four types of co-pay clauses in health insurance:Ĭo-pay in medical billing is for all the claims you raise on the policy. This is how the co-pay will work under different amounts insured. You purchase a health insurance policy with a 20% co-pay on all the claims made during the policy period. To better understand the meaning of co-pay and how it works in health insurance, consider the following example: 72,000 will be paid by the insurance company. Co-pay schemes are commonly availed in senior citizen health insurance policies.įor instance, the co-pay of 10% for a claim amount of Rs. The insurer bears the remaining claim amount. Generally, the co-pay percentage varies from 10% to 30%, which is spent by the insurer from their pocket. With a voluntary option, you can enjoy a reduced premium.Ĭo-pay in health insurance makes it affordable as this clause shares the claim between the insured and the insurer which reduces the liability of the insurer. Several insurance companies provide health insurance with a compulsory co-pay scheme, while others offer a voluntary co-pay option. The remaining amount is settled by the health insurance company. Co-pay meaning (co-payment) in health insurance refers to a fixed percentage of the insurance claim amount that is borne by the policyholder.
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