In the last few years, medical treatments are sky-rocketing. Even though the earning capacity of people has increased, getting medical facilities at affordable cost is next to impossible. Therefore, whether a rich or poor, health insurance plan is a must buy instrument as it secures you against unforeseen medical emergencies. Buying health care insurance allows you to safeguard yourself and your loved ones against financial emergencies that might arise while undertaking medical treatment.
Once you decide to purchase a health insurance policy, one of the features that everyone talks about is ‘co-pay’ or ‘co-payment’. As the name suggests, co-pay is splitting up medical costs between the insurance provider and the policyholder. Cost-sharing is the basic ideology behind ‘co-pay’. Thus, understanding the working of ‘co-payment’ features will help you in choosing the right health insurance policy. Read on to understand everything about co-pay in health insurance plans.
What is Co-payment?
A co-payment feature of a health insurance plan refers to the policyholder’s agreement to bear a certain percentage of the health insurance claim amount while the rest is borne by the insurance provider.
For instance, if your health insurance plan states a 20% co-pay clause so, in the event of medical treatment, the policyholder is bound to bear 20% of the medical expenditure. Let’s assume Mr. A availed medical treatment where the cost of the treatment is INR 1,00,000, so at the time of claim settlement the policyholder shall bear 20% of the medical bill amount i.e. INR 20,000 while the health insurance provider will cover the rest.
How Co-payment Works?
The co-payment feature offered by most of the health insurance providers work in two ways as under:
- Cashless Treatment:
Under cashless health insurance treatment, the health insurance provider offers to pay their part of the percentage with the hospital directly while the policyholder has to pay their part of the cost to the hospital. The hospital sends the medical bill to the insurance provider and the claim settlement on the part of the insurance provider is done directly with the hospital.
- Reimbursement of Expenses:
Under the reimbursement of Expenses method, the policyholder incurs the medical expenses which the insurance provider reimburses upon submission of medical bills. The insurance provider offers the reimbursement of expenses of costs incurred by the policyholder while undergoing medical treatment.
How does the Co-pay Feature Affect Health Insurance Premium?
Many health insurance providers offer co-payment features embedded in their plans. Let us find out how this feature affects the health insurance premium amount.
- A policyholder while buying a health insurance plan can opt for a higher co-pay, where the percentage of cost-sharing to be borne by the policyholder shall be more than the usual percentage. Thus, if a policyholder purchases a health insurance plan with a higher co-pay feature, he/she will have to pay a lower premium, however, the policyholder has to bear a higher amount at the time of claim settlement.
- On the other hand, a policyholder buying a health insurance plan of lower co-pay has to bear a higher health insurance premium, however, at the time of claim settlement, the amount to be borne shall be less.
Today medical treatments are expensive and with hectic lifestyle, medical emergencies come uninvited. So, buying a health insurance plan is advantageous. The co-pay feature helps to mitigate financial emergencies, no doubt in case of a higher medical bill, the share of the policyholder increases but it is surely better than paying the entire amount. Co-pay helps to reduce the burden of medical treatment cost and offers financial relaxation in times of stress. You and your loved ones do not have to stress about the entire treatment cost because with the co-pay feature the health insurance provider covers the higher part.