Most of the Health Insurance Companies in India offers Health Insurance Plans with Co-Payment options (Generally referred as Co-Pay), primarily for the purpose of keeping the claims outgo under check. Though this is very common in the case of group medi claim policies, it is expected that the same will be eventually extended to individual policyholders also, by the Insurance companies.
What is Co-Pay
When your insurance policy has a co-pay agreement, you will have to pay a part of the medical expense out of your own pocket, and the insurer will cover the rest or it is the portion of the claim that a policyholder agrees to bear in the event of a claim. From the perspective of insurance companies, this clause will discourage policyholders from availing treatment benefits which is really not required like in luxury hospitals etc. The clause that that they will have to bear a part of the expenses will give policyholders a thought on their out of pocket expenses and deter them from going in for treatments that would have otherwise not been necessary.
As an example, the share of the insurance company and the individual are specified in the insurance contract and this ratio generally varies from 10–25%. So if the approved claim is Rs 2 lakh, and you agree to a co-pay a ratio of 15%, you will need to bear from your pocket Rs 30,000 and the Insurance Company will pay the balance.
Disadvantages of Co-Pay
A higher co-pay percentage may deter the person who is insured from seeking required medical attention and care and therefore making the purpose of an insurance policy non meaningful.
Higher co-pay offers a less premium. But, it is only beneficial for the insured, as long as the insured do not need cash in the insurance policy. In the case of a claim arising out of an incidence, all that money saved on premiums will have to paid towards the treatment expenses and making the policy expensive.
There is no standard format followed by insurance companies in a co-pay clause. Some policies provide co-pay for certain ailments specified in the policy. Some other plans may insist on the insured sharing the burden if treatment is undergone in certain metropolitan cities. And some other plans, may bring up this clause only when the policyholder seeks treatment at hospitals that are not part of the company or it’s provider network.
Is this the right choice for you?
If you are a person who lives a very active life, healthy and in good physical condition, without history of any diseases, pre-existing illnesses, or any susceptibility to falling critically ill in the future, co-pay can help you to save premiums for you. And if you really do not need to cash in the policy, then it is a good option.