Difference between Co-Payment And Deductible

As its name suggests, a deductible is a fixed amount that acts as the trigger point for your health insurance policy. To put it simply, it is the minimum amount that your medical expenses must reach in order for you to be able to avail yourself of the benefits under your health insurance plan.

Let us understand the concept of deductible in health insurance with the help of an example. Ms Naina has a health insurance policy with a sum insured of ₹1,00,000 and a deductible of ₹5,000. This means that she will be able to utilise the benefits of her health insurance policy only if her medical expenses exceed ₹5,000.

For claims that fall short of this ceiling of deductible, Naina has to bear the cost of the medical expenses. If, however, the total medical expenses are higher than the deductible determined at the time of the purchase of the health insurance policy, say ₹10,000, Naina can file a claim for ₹5,000 after paying the deductible (₹5,000) from her pocket.

1. Deductibles are fixed at the point of purchase or renewal of a health insurance policy;
2. The lower your health insurance deductible, the higher is your health insurance premium, and vice versa;
3. Deductibles protect insurers from small and regular health insurance claims.

Copay is another term frequently used in the context of a health insurance policy. As is evident from its name, a copay in health insurance is the amount of your health insurance claim that you have to pay. The notion of copayment finds its genesis in the sharing of the burden of health insurance payments between the insurer and the insured.

The copay aspect of your health insurance policy can be either in the form of a fixed sum or a fixed percentage of the sum insured under the plan. Let us understand the concept of copay in health insurance with the help of an example. Mr Aalekh has a health insurance policy with a sum insured amounting to ₹1,00,000 and a copay of 10 per cent.

Whilst filing a health insurance claim on the above policy, 10 per cent of the total claim amount shall have to be borne by Aalekh whilst the remaining 90 per cent shall be paid by the insurer. For instance, if the health insurance claim is for ₹50,000, then Aalekh shall copay it to the tune of ₹5,000, and the insurer will pay the remaining amount, that is, ₹45,000.

1. The fixed sum or the percentage of copay in health insurance is determined at the time of purchase or renewal of the plan;
2. The higher your health insurance copay amount, the lower is the health insurance premium you have to pay, and vice versa;
3. The maximum proportion of the copayment in a health insurance policy is generally undertaken by the insurer.

If you are wondering which is better - copay or deductible, then it is important to understand that they are two different concepts and have varying impacts on your health insurance policy. Here are the major differences between copay and deductible in a health insurance policy.

Although both copay and deductible in health insurance lead to a reduction in your health insurance premium, they simultaneously enhance your own financial exposure to your medical expenses. Therefore, it is important to understand the minutiae of these concepts and be mindful of them whilst selecting a health insurance policy. Further you can also check our compare health insurance resource to understand how to pick the right health insurance plan for your and your family - be it an individual health insurance or a family health insurance plan.

You can check out Tata AIG's health insurance plans on our website and study the policy wordings to understand various important clauses, including the ones for health insurance copayment and deductible.