Co Pay in Health Insurance

Co-pay or co-payment is a clause in health insurance policies that allows you to share the cost of your medical treatment with your insurer. Here, you (the policyholder) agree to cover a fixed percentage of the approved claim amount each time a claim is made. This percentage can be either mandatory or optional depending on the type of plan you choose and other factors like age.

For example, many health insurance plans for senior citizens have a voluntary co-payment clause or condition of around 10 to 20%. On the other hand, some plans offer an option to waive this condition in return for an additional premium (add-on). Let us look at the following scenario to understand the co-pay meaning better:

Let us assume you buy our Elder Care plan for your senior citizen parents, which has a mandatory co-payment condition of 20%. So, in this case, if the total hospitalisation bill costs ₹4,00,000, the claim amount and your share in the expense would be the following:

Here is how co-pay typically works in medical insurance:

• The policyholder selects a health insurance plan that has a co-pay feature.

• When the policyholder visits a healthcare provider or hospital and receives a medical service, they must pay the co-pay amount directly to the healthcare provider or hospital.

• The healthcare provider bills the insurance company for the remaining amount of the medical service.

• The insurance company pays the remaining amount to the healthcare provider.

What is Co-Pay in Medical Billing: Understanding the Practical Implications

Co-pay in insurance gets activated right when you raise a claim for your medical expense and is approved by us. Suppose you receive an in-patient treatment for dengue in Mumbai and file a claim of ₹30,000. As soon as it is raised and approved, you pay the applicable co-payment amount first, and we’ll cover the rest.

It's important to note that co-pay amounts vary depending on the type of medical service received and the health insurance plan. For example, a policy may require a ₹1,500 co-pay for a visit to a primary care physician and a ₹6,000 co-pay for a specialist visit.

Most insurance companies in India add a co-pay to their health insurance policies for a few reasons:

• Cost-sharing: Co-payments are a way to share the cost of healthcare between the policyholder and the insurance company. By requiring the policyholder to pay a portion of the cost, the insurance company can reduce overall costs and keep premiums more affordable.

• Provides Coverage for High-Cost Treatments: Co-pay in health insurance policies can be beneficial for covering high-cost treatments such as surgeries, chemotherapy and other medical procedures. Since policyholders must pay only a percentage of the total bill, the co-pay clause can help reduce the financial burden of such treatments.

• Customisation: Co-payment clauses can also allow insurance companies to offer consumers a more comprehensive range of policy options. By providing policies with different co-payment amounts and structures, insurance companies can better tailor policies to the needs and preferences of other consumers.

• Encourages Responsible Use of Healthcare Services: Co-pay in medical insurance can encourage responsible use of healthcare services by discouraging unnecessary visits to healthcare providers. It can help control healthcare costs and improve the efficiency of the healthcare system.

• Reducing Risks: Co-payments can also help reduce the insurance company's risk by reducing the number of claims and the cost of each claim. By requiring the policyholder to bear some of the cost of healthcare services, the insurance company can reduce their exposure to large claims.

At TATA AIG, we do not include a co-pay in all our health insurance plans. Co-pay is an optional feature that can be included in some of our health insurance plans. The availability of the optional feature and the co-pay amount may vary depending on the specific health insurance plan selected. We recommend that you review the policy document carefully and understand the terms and conditions before purchasing any medical insurance plan.

Whether you should opt for co-pay in insurance depends on your medical needs and financial capacity to cover the resulting out-of-pocket expenses. So, before purchasing a health plan with a co-payment clause, consider your medical history and present medical condition.

For example, if you do not suffer from a serious health condition and maintain a healthy diet, lifestyle and exercise regularly, you have a lower chance of filing a claim. As a result, purchasing a health plan with a co-payment option will benefit you as it will reduce your policy premium without you paying too much out of your pocket during claims.

On the other hand, if you lead a sedentary lifestyle or are elderly, you are more vulnerable to health problems. You may need to file one or multiple claims under your medical insurance plan at some point. Thus, opting for a medical insurance policy without a co-pay will be best for you.

Health insurance policies include various types of co-pay clauses, which are based on different factors. Understanding these can help you choose the right coverage for your needs:

• Age-Based Co-Pay: As we age, our healthcare needs naturally increase, leading to higher treatment costs. Insurance companies often apply co-pay clauses for plans designed for senior citizens to manage this increased risk.

• Hospital Network Co-Pay: This applies when you seek treatment at hospitals outside your insurer's network. While you enjoy cashless treatment at network hospitals without any co-pay, visiting non-network facilities may require you to share the treatment costs through reimbursement claims.

• Medical Condition Co-Pay: Certain health conditions, including critical illnesses and pre-existing diseases, often require expensive treatments. Insurance companies may apply co-pay clauses for these conditions, requiring you to contribute a portion of the treatment costs.

• Location-Based Co-Pay: Medical expenses in metropolitan cities are typically higher than in smaller towns. To balance this risk, insurers may implement co-pay clauses in high-cost urban areas where medical treatments tend to be more expensive.

As mentioned, the co-pay clause can either be mandatory for the plan you choose or can be added as a condition for only certain types of coverage, such as road ambulance coverage. Here are the co-payment clauses applied to our health insurance plans:**

• Co-Pay for Higher Room Limits: If you opt for a room that is in a higher room category than covered in your base policy, a 10% co-pay clause is added for the higher room rent.

• Higher Zone Co-Payment: If you get treatment at any hospital, daycare centre or AYUSH centre, except for an injury, in Zone A, a 20% co-pay will be applied to each claim under our TATA AIG SuperCharge Geo Plan.

• Age-Linked Co-Payment: If you are buying health insurance for senior citizens above the age of 61 years of age, a 20% co-pay is applicable for each approved claim.

• Add-Ons Related to Co-Pay Available With TATA AIG Health Insurance

• Waiver of Higher Zone Co-Payment Add-On: You can waive off the applicable (20%) mandatory co-pay with this add-on when purchasing the base plan.

• Co-Payment Waiver Add-on: You can opt for this add-on, which waives the co-pay applicable to plans for senior citizens.

• Voluntary Co-Payment: With this add-on, you can opt for a fixed percentage of co-payment for your chosen health insurance plan and reduce your premium prices.

Read More: Add-ons in Health Insurance

Before opting for a health insurance plan with a co-pay clause, here are some essential things that you should consider to make an ideal choice for your unique circumstances:

• Your Healthcare Needs: Consider the type of medical services you are likely to require in the future. Suppose you have a pre-existing medical condition requiring frequent medical attention; a co-pay plan may add to your out-of-pocket expenses. On the other hand, if you are in good health and only require occasional medical attention, a co-pay plan may be an ideal opportunity to save on premiums.

• Know Your Budget: Determine how much you can comfortably pay upfront during medical emergencies. Choose a co-pay amount that won't strain your finances when you need care most. Remember, the co-pay is paid immediately at the time of treatment.

• Risk Tolerance: If you prefer knowing about your expenses, opt for higher premiums with lower co-pays. If you are comfortable with handling some expenses from your own pocket and want to save on premiums, higher co-pay options might suit you better.

• Co-Payment Amount: Understand the co-payment amounts for different healthcare services and providers. For example, our Elder Care policy has a distinct co-pay condition for Road Ambulance Cover, and no co-pay is applicable for certain surgical procedures like joint replacement surgery.

• Policy Benefits: Look into other policy benefits, such as access to add-ons that allow you to remove the co-payment requirement. The TATA AIG Co-payment Waiver add-on is available with our Senior Citizen Health Insurance plan.

• Policy Terms and Conditions: Carefully read and understand the policy terms and conditions, including the co-pay clause, exclusions and limitations. Contact our expert team or insurance agent for clarification if you have any questions

• The 20-80 Rule: Most insurers apply a 20% co-pay for senior citizens (60+ years). If you're planning family coverage, consider the age of your family members and calculate accordingly to avoid last-minute out-of-pocket expenses.

• Premium Impact: Co-pay can reduce your premium by 15-30% in metros like Mumbai, Delhi and Bangalore, where medical costs are higher. This saving is particularly valuable for young professionals starting their careers.

• Pre-Existing Disease Waiting Period: Co-pay often applies even after the standard 2-4 year waiting period for pre-existing conditions. Budget for this additional cost if you have diabetes, hypertension or other chronic conditions.

• Room Rent Limit: Some of our policies, such as TATA AIG MediCare, have a room rent limit, which means you can opt for any room that has a rent fitting into the set limit. If you choose a higher-category room, you will have to pay 10% of the related claim amount yourself. So, balance both carefully to avoid unexpected expenses.

• Tax Benefit Impact: Co-pay payments qualify for tax deductions under Section 80D. You can claim up to ₹25,000 (₹50,000 for senior citizens) annually.

• Emergency Fund Requirement: Keep 3-6 months of co-pay amounts readily available in your emergency fund, as these payments are required upfront during treatment.

Check: TATA AIG Health Insurance Premium Calculator to calculate the premium impact.

It is also important to understand that the co-pay is different from deductibles and co-insurance. While co-pay and deductible both are forms of cost-sharing between the policyholder and the insurance company, they are applied differently.

Read More: Difference between Co-Payment And Deductible

Co-payment in insurance is a way to reduce your premium prices and share the cost of your medical expenses with your insurance provider. This helps reduce the financial burden on your insurance provider to support recurrent claims, which in turn creates cost-effective solutions for you. This cost-sharing percentage depends on the plan you choose, your age and location, and is set at the time of purchasing the best health insurance plan.

With us, you get access to our wide range of health insurance plans, which provide you the flexibility to customise and pick the best-suited option. We offer add-ons to waive off the co-pay percentage or voluntarily opt for a co-pay to get low premium health insurance. In addition, our extensive network of 12,000+ hospitals spread nationwide and 24/7 customer assistance ensures you are guided throughout the smooth claim process.