Co-Payment Clause in Group Health Insurance

Copayment in insurance is referred to as a way of sharing medical expenses costs with insurance providers. Under this clause, policyholders need to pay a certain amount of medical expenses as mentioned in their policy condition, and the insurance provider covers the rest.

In simple words, the policyholder and insurance provider will bear a specified percentage or amount of the admissible claim amount for medical expenses. The copay in medical billing offers shared responsibility between the policyholder and the insurance provider.

Also Read: Co-Pay In Health Insurance

Copayments are basically categorised into three types, which are:

Percentage

In this type of copayment option, the employee has to bear a certain percentage of the claim's admissible amount or portion of the medical expenses. The insurance provider bears the rest.

The percentage may vary from insurance provider to provider. It can be between 10 to 30% of the medical expenses.

Suppose you have a group health insurance policy with a 20% copayment clause. You have to seek medical treatment, which costs you around ₹5,00,000.

Then, as per the policy condition, you need to pay ₹1,00,000, which is 20% of the admissible claim amount and the rest will be covered by the insurance provider, which is ₹4,00,000.

If the claim is cashless, then the insurance provider will pay their part and you need to pay the rest to the hospital. However, if it is a reimbursement claim, then you need to pay the full upfront cost, and the insurance provider will reimburse the amount once you file the claim.

Fixed Fee

Some group health insurance plans offer fixed amounts or fees for specific healthcare services like doctor visits, consultations, prescription drugs, etc., under their plan.

It simply means the employee needs to pay a fixed fee regardless of the medical service cost.

Suppose the doctor consultation fees are set at ₹350 as per the policy condition. Then, employees need to pay the ₹350, and the insurance provider will cover the rest.

Annual Deductibles

Some group health medical insurance policies come up with an annual copay clause. This means that employees need to pay a yearly deductible for the entire year.

Let us say that the annual deductible is ₹10,000 for employees and the medical expenses during the year are ₹50,000.

Then, as per the policy condition, employees need to pay the ₹10,000 while the insurance provider will cover ₹40,000.

In a group medical insurance policy, the copayment clauses are set by the employer, who also pays the policy premium.

This involvement of the employer ensures that all terms and conditions of the group medical insurance policy are transparent and well-understood by the employees.

If the employer opts for a copayment clause in a group health insurance policy, then the employee needs to bear a certain percentage of the claim amount as per the policy condition.

The insurance provider decides the percentage. However, the copayment clause does not reduce the sum insured.

Let us understand the percentage copayment in group health insurance by example. Rahul works for XYZ, which offers a group health insurance policy with a copayment clause of 15% of the admissible claim amount. The sum insured offered under the policy is ₹5 lakh.

During the job tenure, Rahul fell sick and had to be admitted to hospital. The medical expenses incurred during Rahul's hospitalisation were as follows:

The total medical expenses incurred by Rahul is ₹1,20,000. As per the policy condition, Rahul has to bear 15% of the total expense.

It means 15% of the total expense amount, which is ₹18,000, which he needs to pay out of his pocket; the rest amount, which is ₹1,02,000, is paid by the insurance provider.

The copayment clause in group health insurance policies offers several advantages to policyholders, empowering them with a sense of responsibility and control over their healthcare costs.

Reduced Premium Amount

One of the key benefits of having a copayment clause in group health insurance is that it helps reduce the premium cost for the employer.

Since the employee shares a portion of the medical expenses, it lowers the insurer's financial risk, allowing them to offer the policy at a more affordable rate.

Avoid Fraudulent Claim

Another benefit of copayment in a group medical insurance policy is that there are no fraudulent activities by the employees.

In the copayment clause, the employee needs to pay a percentage of the admissible claim amount. Hence, it promotes the honest and judicious use of the policy.

Discourage Unnecessary Claims

The copayment clause in group health insurance serves as an effective deterrent against unnecessary claims.

Requiring employees to cover a portion of their medical expenses encourages them to reserve their insurance for more substantial treatments and manage minor costs independently.

Responsible Health Care Facilities

Another benefit of copayment in group health insurance policy is the responsible use of healthcare facilities.

With a copayment clause, employees look for healthcare facilities that have reasonable healthcare treatment costs since a certain percentage of the amount needs to be paid by them.

While opting for copayment clauses in group health insurance policies, some pointers need to be considered to make an informed decision.

Health Conditions

Health conditions are one of the aspects that need to be considered by the employer when purchasing a group health insurance policy with a copayment clause.

If the employer has a workforce with minimal healthcare needs, then opting for a copayment clause is a good option since there will be a lower frequency of claims, resulting in fewer out-of-pocket expenses.

Coverage Requirements

Another thing to look for while opting for a copayment clause in a group health insurance plan is the type of coverage offered by the insurance provider.

It is best to review the type of treatment that is eligible for copayment under the policy. Furthermore, it is also best to go through the medical services that have higher copayment percentages under the policy.

Affordability

Besides this, employers also need to consider the affordability of premium and copayment percentages while choosing a group health insurance policy.

It is best to choose the policy that fits your organisation's needs and budget. If you are opting for a copayment clause, then you need to ensure that it should be affordable to employees.

Flexibility

Another thing to look for while choosing a copayment clause in a group medical insurance policy is the flexibility to adjust the copayment percentage over time depending on the healthcare and financial needs.

It is best to choose a plan that is customised based on the organisation's needs and budget.

Running an organisation or business in India comes with various financial risks. Any unforeseen situation can bring financial and legal implications. For this reason, various business insurances in India are available, such as group health insurance policies.

Having a group medical insurance policy with an employee benefits package helps in boosting employees' morale and improves employee retention. TATA AIG offers a group medical insurance policy catered to the needs of the organisation.

Is the copayment clause in group health insurance mandatory?

No, the copayment clause in group health insurance is not mandatory. It depends on the policy terms set by the insurer and the employer.

Some group policies may include a copayment clause, while others may not, depending on the coverage and cost-sharing agreement.

How is copayment decided under the group medical insurance?

The copayment in group medical insurance policy typically depends on factors such as the premium amount, the level of coverage, the insurer's risk assessment and the employer's budget.

The percentage of copayment is usually fixed and requires the employee to pay a portion of the medical expenses, with the insurer covering the remaining cost.

Can I opt out of paying copayment in medical billing?

No, you cannot opt out of paying the copayment if it is a part of your group health insurance policy. The copayment is a pre-agreed cost-sharing arrangement between the insurer, employer and employee.