Have you been asked by your insurance agent of the broker whether you would like to go in for ‘co-payment’ option at the time of purchase of your medical insurance policy? Insurance companies offer the option of ‘co-payment’ to consumers, which in simple terms means sharing the claims burden if and when such as situation arises.
So, what is co-payment and how it works? “Co-payment also called ‘co-pay’ is the share of the final permissible claim amount that the customer needs to pay from his or her own pocket,” says Mahavir Chopra, Director – Strategic Initiatives of Coverfox.
Saroj Satapathy, CEO, Ideal Insurance Brokers Pvt Ltd says that the co-pay could be either a fixed amount or a percentage of the admissible claim amount. If it is in percentage terms, here is how it will work: If your insurance policy has a co-pay clause of 10% and your medical expenditure has totally amounted to Rs 10,000, you will have to pay Rs 1,000 out of your own pocket and the insurer will cover the remaining Rs 9000.
With the help of Chopra and Satapathy, FeMoney brings to you the pros and cons of opting for co-pay instead of the regular option where the entire claims burden is borne by the insurance company.
Lower premium cost: If one opts for an insurer offering a co-pay policy. Copayment can help reducing the premium for plans that could otherwise be out of reach for certain categories or class of customers. For instance, copays in senior citizen plans make the premiums affordable for them.
If the co-pay amount is too high it may deter the insured person from seeking best of medical attention and care – thus rendering the insurance policy completely useless. A person who has to pay a high amount of co-pay is pretty much un-insured, as the whole purpose of the insurance policy is defeated.
May lead to high payout and negate premium saving: Co-payment is only beneficial for the insured person as long as you don’t need to cash in your insurance policy. But if something happens, all that money you saved on premiums may have to be paid towards the treatment expenses anyway, if the cost of treatment is too high.