Copay, Coinsurance, and Deductible Explained: What’s the Difference?

Copay Vs Coinsurance Vs Deductible- Know The Difference!

Q: What Is the Difference Between a Copay and a Coinsurance?

A copay is a fixed amount or a fixed percentage that the policyholder must pay for specific services, like a doctor's visit. Coinsurance is a percentage of the total medical costs that the policyholder pays after meeting the deductible.

Q: What Is the Difference Between Copay and Deductible?

A copay is a fixed amount or percentage paid every time you use a medical service. A deductible is the amount you must pay before your health insurance starts covering costs.

Q: What Is an Example of Coinsurance?

For example, with a ₹10,000 deductible and 20% coinsurance, if your hospital bill is ₹80,000, you pay ₹10,000 first, then 20% of ₹70,000 (₹14,000), totalling ₹24,000 out-of-pocket.

Q: What Is a 20 Percent Copay?

A 20% copay means you pay 20% of the medical bill and your insurer covers the remaining 80%. For instance, for a ₹1,000 bill, you pay ₹200 and the insurer pays ₹800.

Q: Is It Preferable to Have 0% Coinsurance?

Yes, 0% coinsurance is preferable as it offers full coverage by the insurer and minimizes out-of-pocket costs.

Q: Is Copay Applicable during Cashless Hospitalisation?

Yes, copay is still applicable during cashless hospitalisation. You will be responsible for paying the fixed copay amount or percentage.

Q: What Does It Mean to Have a Copay with a Deductible?

It means your insurance plan requires you to pay a deductible amount first, and after that, you will also need to pay a fixed amount or percentage as copay for each service.

Author :
TATA AIG Team
●
Last Updated On :
31/07/2025

Knowing how health insurance coverage works can be confusing, especially when it comes to terms like copay, coinsurance and deductible. Each of these costs comes into play at different stages of your healthcare journey and understanding how they work can help you plan better and avoid surprises when it is time to use your insurance.

A copay is a fixed fee you pay for specific health services, such as doctor's visits or prescriptions, during claim settlement.

Deductible is the amount you must pay before your insurer starts covering your medical expenses. Coinsurance, on the other hand, is a percentage of your medical costs you share with your insurer after you have met your deductible.

But this is not all. There is more to learn about how these costs interact and what they mean for your overall coverage. So, here is a clear and concise guide to what coinsurance vs copay vs deductible are in health insurance, with copay, coinsurance and deductible examples.

What is a Copay?

A copay, also known as a copayment, is a fixed amount or a fixed percentage (of the medical expenses incurred) that you are liable to pay every time you avail of a health service.

Once you pay the copay, your health insurance provider steps in to cover the remaining amount of your claim.

This means you will only have to bear a small portion of the total healthcare cost and your insurer will pay the majority of the expenses.

For instance, let us assume that you visit a hospital and the total bill comes out to be ₹50,000. You raised a claim for this amount under your health insurance policy and the specified copay amount was ₹4,000.

In this scenario, you will have to pay ₹4,000 out-of-pocket while your insurance provider will cover the rest of the amount, i.e., ₹46,000.

The idea behind copay is to share the healthcare costs between you and your insurer.
Knowing your copay amount allows you to plan and budget for your healthcare expenses in advance, which ultimately helps you avoid surprises at the time of claim settlement.

What is a Deductible?

A deductible is the amount that you are required to pay from your pocket before your health insurance coverage kicks in to cover the medical costs.

For example:

Let us assume that you have a health insurance policy with a deductible of ₹15,000 and you need to undergo a treatment that costs ₹75,000.

In this case, you will be responsible for paying ₹15,000 from your own pocket, and only then your insurance provider will step in to cover the remaining amount of ₹60,000.

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Let us illustrate another scenario where the medical bills are less than your policy’s deductible.
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Assume that you have a health insurance policy with a deductible of ₹15,000, but your medical bill is only ₹10,000.

In such a case, you will be required to pay the entire ₹10,000 from your pocket without any reimbursement or financial help from the insurer.

This example shows that if your healthcare costs are lower than your deductible, your insurance coverage will not be triggered, and you will have to cover the costs yourself.

Types of Deductibles

**Compulsory Deductible**: A compulsory deductible is a deductible that the policyholder must pay in the event of a claim. It is set by the insurance company and is usually mentioned in the health insurance policy agreement.

**Voluntary Deductible**: This is a deductible that the policyholder chooses to pay from their own pocket. Unlike the compulsory deductible, the voluntary deductible is decided by the policyholder themselves.

Opting for a voluntary deductible reduces the premium amount. This helps policyholders balance their premium payments according to their financial situation.

To put it simply, a deductible is like a threshold that needs to be met to activate your health insurance benefits. Having a clear understanding of your deductible amount helps you know exactly what to expect, which in turn enables you to plan your healthcare expenses more effectively

What is Coinsurance?

Coinsurance is a provision in health insurance under which you pay a certain percentage of your healthcare costs and your insurer covers the remaining portion.

While coinsurance seems similar to copay, there is a key distinction between these two terms.
Coinsurance typically kicks in after you have paid your deductible, whereas copay is a fixed amount/percentage you pay for each medical service, regardless of the deductible.

Let us understand this with a coinsurance and deductible example:

Mr A has a health insurance policy with a deductible of ₹10,000 and a 20% coinsurance.

If his medical bill is ₹50,000, he will first pay the deductible of ₹10,000 and then he will be required to pay 20% of the remaining ₹40,000 which is ₹8,000.

Once Mr. A pays the deductible and the coinsurance amount, his insurance provider will cover the rest of the bill, i.e., ₹32,000.

Copay Vs Coinsurance Vs Deductible

Parameter	Copay	Deductible	Coinsurance
Purpose	The purpose of a copay in health insurance is to share the cost of specific services and reduce the financial burden on the insurer.	The purpose is to share the medical bill between the policyholder and the insurance company. It discourages the insured from filing small claims by requiring them to pay a fixed amount before their insurance coverage kicks in.	The purpose of coinsurance is to share the cost of medical expenses between the policyholder and the insurance company after the deductible has been met. It is like splitting the remaining costs on a percentage basis.
Payment Clause	A copay (copayment) is typically paid by the policyholder every time they receive a service, such as when they visit a doctor's office or receive medical treatment and raise a claim for it.	The deductible is counted for an entire policy year. So, once the policyholder reaches the deductible limit, he does not need to pay the deductible again for each claim.	Coinsurance is paid by the policyholder only after the applicable deductible has been paid.
Effect on Premium	Copay may or may not affect the premium. Typically, health insurance policies with higher copay amounts have lower premiums.	The higher the deductible, the lower the premium. This means that policyholders who choose higher deductibles can enjoy lower premium payments.	It can differ across health insurance providers, as some may offer lower premiums with higher coinsurance rates while others may not, depending on their specific policies and pricing strategies.
Benefit	As the copay amount is usually a fixed amount, it allows policyholders to budget and predict their out-of-pocket expenses.	A deductible can lead to lower monthly premiums. Additionally, deductibles encourage policyholders to be more mindful of their medical expenses and seek cost-effective care, promoting responsible healthcare spending	Since the coinsurance payment is made only after the deductible has been met, the policyholder will typically pay a smaller amount as the coinsurance rate is applied to the remaining balance
Potential Drawback	It may encourage overutilisation of healthcare services as policyholders may seek more medical care since their out-of-pocket costs are limited to a fixed amount per visit.	It can be a significant upfront financial burden as policyholders have to pay the full deductible amount before their insurance coverage kicks in. This can be difficult for those who are struggling financially.	It can be unpredictable and costly for policyholders as they may have to pay a bigger amount based on the specified coinsurance percentage. It can potentially result in financial strain.

Is Choosing Health Insurance with Copay, Deductible or Coinsurance Clauses a Good Idea?

Choosing a health insurance policy with copay, coinsurance or deductible clauses can be a good choice for some individuals. However, this depends on their health needs and financial situation.
For this, it is crucial to understand how health insurance copays, deductibles and coinsurance work.

As discussed, a copay is a fixed amount or fixed percentage of the medical costs you pay for each doctor visit or service, whereas coinsurance is a percentage of your medical bills or claim amount you pay after meeting your policy’s deductible.

The deductible is the amount you pay out-of-pocket before your insurance kicks in.
While these three can help you lower your health insurance policy premium, it is important to consider whether the potential savings are worth the increased upfront costs.

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If you are healthy and not suffering from any chronic illness, opting for a copay, deductible or coinsurance might be a good option.
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The reason behind this is that, in this case, you likely will not need frequent medical care which means you will make fewer claims and ultimately pay less out-of-pocket in the long run.
With a coinsurance, deductible or copay, your premiums will stay relatively low, allowing you to enjoy health insurance policy coverage at an affordable cost. This can be a smart way to balance your healthcare expenses and budget.
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But if you have ongoing health issues or prefer more predictable health expenses, you should buy a policy with more comprehensive coverage or lower out-of-pocket costs.
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This is because if you need regular medical visits/care, having copay coinsurance and deductible and out of pocket in your policy can increase your overall out-of-pocket expenses, ultimately costing you more in the long run.

Ultimately, the decision depends on your individual circumstances, health needs and financial priorities. By carefully weighing the pros and cons of each of these clauses, you will be able to make an informed decision that suits your unique situation.

Conclusion

Understanding copays, coinsurance and deductibles is crucial for navigating the world of health insurance.

By grasping what coinsurance vs copay vs deductible, you can make informed decisions about your coverage and balance your healthcare expenses with your budget.

If you are healthy and seek lower premiums, you must opt for copays, coinsurance or deductibles. But if you have ongoing health issues or prefer predictable medical expenses, you must choose a policy with lower out-of-pocket expenses.

At TATA AIG, we offer the best health insurance policy with affordable premiums and optimal coverage.

From individual health insurance plans to senior citizen health insurance plans and critical illness health insurance plans, we have the perfect health insurance policy for you.

Browse our health insurance plans today and discover how TATA AIG can help you secure your health and financial future.

Visit our website or contact us to learn more or buy health insurance.

Frequently Asked Questions (FAQs)

What Is the Difference Between a Copay and a Coinsurance?

A copay is a fixed amount or a fixed percentage (of the claim amount) that the policyholder must pay for a specific service, such as a doctor’s visit.

On the other hand, coinsurance is a percentage of the total medical costs that the policyholder must pay after meeting the policy’s deductible.

Understanding copay vs coinsurance helps you better navigate your health insurance plan and anticipate your out-of-pocket expenses.

What Is the Difference Between Copay and Deductible?

A copay is a fixed amount or a fixed percentage of medical costs that you have to pay out of pocket every time you avail of a medical service.

Whereas, a deductible is the amount you have to pay for your medical expenses before your health insurance policy coverage kicks in.

What Is an Example of Coinsurance?

Here is an example of health insurance coinsurance vs deductible:

Suppose you buy health insurance with a deductible of ₹10,000 and 20% coinsurance for hospital stays. If your hospital bill is ₹80,000, you will first pay the deductible (₹10,000) and then 20% of the remaining cost (₹70,000).

Since 20% of ₹70,000 is ₹14,000, you will be required to pay this amount as coinsurance.

So, the total amount you will have to bear is ₹24,000 (₹10,000+₹14,000) and your insurance company will cover the rest.

What Is a 20 Percent Copay?

A 20% copay means you would pay 20% of the medical bill while your insurance would cover the remaining 80%.

For example, if a doctor's visit costs ₹1,000, you will be paying ₹200 (20% of ₹1,000) and your insurance would cover ₹800 (80% of ₹1,000).

Is It Preferable to Have 0% Coinsurance?

Yes, having 0% coinsurance is preferable as it provides maximum financial protection and eliminates out-of-pocket expenses.

Is Copay Applicable during Cashless Hospitalisation?

Yes, copay is applicable during cashless hospitalisation.

What Does It Mean to Have a Copay with a Deductible?

Having a copay with a deductible means you have a health insurance policy where you will have to pay a fixed amount or fixed percentage (copay) for specific services after meeting the deductible amount.

For instance, if your plan has a ₹50,000 deductible and a ₹5,000 copay, you would cover the first ₹50,000 in medical expenses and then pay ₹5,000.

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.