Main menu


Should you take a health insurance policy that comes with a co-pay clause?

Should you take a health insurance policy that comes with a co-pay clause?

Generally, your health insurance pays your hospital bills, up to the amount of your guaranteed policy. But did you know that some health insurance policies pay you only a portion of the amount even though your bills are within the full guaranteed amount?

Although your health insurance policy is supposed to pay for hospital bills, many policies have clauses that limit the amount you are entitled to reimbursement. These include sub-limits for room and roof rent based on disease. Also, one of the biggest barriers is the copayment requirement. The copayment requirement can be found in many senior health policies, as well as Arogya Sanjeevani's Uniform Health Insurance Coverage. In simple words, if your health insurance policy has a copayment clause, then you must pay a portion of the hospital bills. That is what it means.

How does co-pay ratio work?

Copayment rates typically range from 5 to 30 percent. So, if your co-pay ratio is 30 percent and your claim amount is Rs 1 lakh, you will have to pay Rs 30,000 out of pocket before entering the insurance company with the remaining amount.

Remember that the amount owed by your insurance company will be 30 percent of the accepted claim. Suppose the hospital bill is 1 lakh rupees. This hospital bill includes a 10,000 rupee diagnostic test, which has nothing to do with the treatment you underwent. Now, the insurance company will treat these expenses as an exception - the amount they will not pay. Therefore, the actual claim that will be paid to you will be Rs 63,000 (90 percent of the accepted claim of Rs 90,000). You will have to pay 37,000 rupees with your own money.

Does the requirement to participate in the payment of the insurance policy help the insured?

Somehow, yes, it helps. Insurance companies can offer cheaper policies because they limit the amount they must pay in the event of a claim. In other words, this provides the opportunity for older people with chronic diseases such as diabetes or high blood pressure to purchase some form of health coverage, even if it is suboptimal.

This is because, given their health and age, they are less likely to get regular coverage at reasonable rates. Health insurance companies are generally reluctant to offer regular coverage to these people because the chances of filing large claims are often higher.

Do all policies come with copay rates?

No. Policies for the elderly generally have a co-pay rate, as the risks to the insurance company are much greater. It also establishes shorter waiting times for pre-existing conditions, which is an added bonus for policyholders. For example, the Star Health and Allied Insurance senior health insurance policy covers pre-existing conditions starting in the second year, as opposed to normal policies that have a waiting period of up to four years.

On the other hand? Common payment and other restrictions. Therefore, Star Health's red carpet policy sets a co-pay insured amount of Rs 15 lakh of 30 percent for all claims. After that, some policies may charge a copayment for claims for pre-existing conditions. Alongside this, Aarogya Sanjeevani's standard health policy that all uninsured insurers must submit is mandatory, with a combined pay rate of 5 percent.

Should I buy a policy with copay rates?

Ideally, you shouldn't. Your premium may be cheap, but it also means spending a lot of money out of pocket at the time the claim is settled. If you have to take on a large portion of the claim on your own, this partially eliminates the purpose of having a health insurance policy. 

Before purchasing any policy, be sure to follow clauses such as sub-limits and copayment rate, which can drastically reduce the claim that your insurance company will pay you. If you are a healthy young man, it is better to pay a higher premium and buy a policy free of restrictions than to suffer from heartburn when the claim is settled. A nominal 5 percent copayment requirement might not strain your money, but the 30-50 percent rate is totally avoidable.

On the other hand, in some cases, you may not have a choice. For example, if you are looking to purchase an insurance policy for yourself or your parents over the age of 65, you will have limited options to choose from. Given the high risk of hospitalization and the higher frequency of claims at that age, these policies are likely to include a copayment coefficient.