Health insurance policy is a safeguard that protects us from unaffordable medical care when it is needed the most. While the general assumption is that our insurance policy covers the bills, there are instances where we may have to bear a part of the bill.
Copay & deductibles are two such situations that are overlooked while purchasing a policy. An informed decision is afterall what saves you from paying the a whopping amount and reap optimum policy benefits. (Also read: Looking to buy health insurance policy? First time buyers must check out 5 major tips)
What is Copayment or copay?
A copay is a cost-sharing clause that requires the insured to make a percentage payment of the allowable costs. It is also one of the most critical factors that need to be considered before purchasing a health insurance policy. Understanding the copay clause will help you avoid unnecessary financial stress at the time of hospitalization or illness. Another important aspect is that copayment is applicable on both cashless and reimbursement claims.
For example, if you are charged Rs 10,000 for a medical bill, and your health insurance policy has a 10% copay clause, then you, as the insured, will have to pay Rs 1000, and the insurer will pay the rest.
Copayment does not reduce your sum insured; however, it reduces the claim amount which you receive.
There are multiple variations in co-payment that you come across in the market:
● Certain % of copay applicable on each claim
● Certain % of copay applicable only on the dependent claim
● Lower % or no copay to employees & dependents, and higher % of co-pay for parents
● Zonal copay
● Copay applicable on claims from non-network hospitals
● Voluntary copay
● Compulsory copay
● Copay on claims preferred outside the specified geographical location
What is a Deductible?
A Deductible is a clause used by insurance companies as a threshold for policy payments. In simpler terms, a deductible is an amount that the insured agrees to pay themselves. The Insurer will therefore not be liable for the specified amount of the covered expenses.
For example, if the policy has a deductible of Rs 30,000 for a Sum Insured of Rs 20 Lakh, you will have to pay Rs 30,000, and the insurer will bear the rest.
So, what’s the difference between a regular policy and a deductible? Simple - You’ll be paying a significantly lesser premium for a policy with deductibles.
For example, a standard policy premium for a 60-year-old woman may cost INR 5000, whereas a policy with a deductible will cost her INR 2,300. A deductible does not reduce the sum insured. (Insurers define whether the deductible is applicable per year, or life, or event, or specific deductible limits).
● Voluntary deductible
● Compulsory deductible
What is the key takeaway or the bottom line?
Your insurance policy may not cover your treatments fully. So, always be aware of your health insurance policy inclusions and exclusions. With the plethora of health insurance policies out there, don’t forget to compare policy terms and conditions so that your policy is best suited for your requirement.
(Expert comments by Nikhil Chopra, Chief Business Officer - Medi Assist Healthcare Services)