In order to cater to the rising health insurance cost, insurers have introduced a co-pay element in the health insurance plans.
With the rapidly-increasing healthcare expenses in India, a health insurance cover has become a basic necessity. As per several reports, the country is home to roughly 17.5% of the world’s total population and accounts for over 25% of all neonatal deaths. Moreover, the nation even accounts for over 20% of the global load of diseases along with over than 20% of all child deaths. With all this and most importantly, expensive hospital facilities and treatment, it is not possible for everyone to take treatment at swanky hospitals.
To reduce the burden, insurers have started offering health insurance so that everyone can take the best available treatment in the country. However, with the rising healthcare cost, the cost of health insurance covers is also getting higher. In order to cater to the rising health insurance cost, the insurers have introduced a co-pay element in the health insurance plans.
What Exactly Is Co-pay?
Most of the times, the terms and conditions page in a health insurance policy seems to be confusing for most of the policyholders. However, it is very important to have a proper understanding of all the mentioned terms in order to make a better, evolved and informed decision. One such and very important term is Co-pay. Under a co-pay plan of the health insurance cover, the policyholder agrees pay a proportion of the total insurance claim. While the proportion of the co-pay lies anywhere between 10 and 25 per cent, the policyholder pays his/her share of the claim and the rest is paid by the insurer.
To understand it better, let’s take an example. Suppose Mr X has a health insurance cover of Rs 10 lakh with a 20% co-pay plan. During a medical emergency, Mr X files a claim of Rs 2 Lakh with the insurer. Now, in this case, Mr X will have to pay Rs 40,000 as co-pay while the remaining Rs 1,60,000 will be paid by the insurer.
Different Types of Co-pay
Most of the insurance companies apply co-pay plan in different ways depending on various scenarios. Let’s talk about some of the very common scenarios where co-pay is applicable.
# Non-network Hospital: In case of medical treatment outside network hospital, a few health insurance plans require co-pay feature. While taking medical treatment it is always advised to be very careful while selecting the hospital. If you do not find a network hospital nearby, you must always try to contact your insurer before getting hospitalized in a non-network hospital.
# Hospitalisation in Different City: It is quite apparent that hospitalisation cost in metro cities is much higher than that in smaller cities. While most health insurance plans do not require the co-pay feature in case of hospitalization in non-metropolitan cities, co-pay is applicable in case of hospitalisation in a metro city. In simpler words, the co-pay feature is applicable when a policy purchased in tier II city is applied for a claim in Tier I city. However, claims from policies issued in Tier I city do not have any co-pay element.
# Pre-existing Disease: None of the insurers covers pre-existing diseases in the health insurance policy till a pre-defined waiting period. The policy holder can avail treatment for the existing disease only after the waiting period is over. However, many insurers offer required treatment only after applying the co-payment feature. Moreover, it entirely depends upon the insurer if he wants to apply co-pay or not.
# Treatment in Expensive Hospital: Even while taking medical treatment at network hospital, some insurers categorise certain specified hospitals as highly expensive and treatment in all such hospitals demands higher co-pay. This is usually because of the higher room rents and surgery charges in various hospitals. Generally, restrictions on room rent and surgery cause proportional reduction of claims payment. It also equally depends upon the various rules of the insurance policy. As a policyholder, it is always advised to confirm with the insurer about the share of co-pay before taking treatment in a swanky hospital.
How good is Co-pay for You?
The co-pay feature is more of a cost and benefit analysis. While people who expect claims in the near future may not find value in co-pay, however those who are not expecting claims in the near future may find great value in taking a health cover with a co-pay feature. Youngsters are advised to opt for the co-pay feature in their health insurance plan as it will help them save on premiums and within a few years, the cost saving can be quite great. Senior citizens are advised not to choose the co-pay feature in their health insurance policy as in old age, the cost of their medical expenses will be quite high and it will directly increase the co-pay amount for them.
No doubt, co-pay is a great way to save on the premium amount, but you must always check the pros and cons of your individual health insurance cover with the co-pay feature before buying a policy. This will help you in better understanding the different requirements of the co-payment clause.
(By Vaidyanathan Ramani, Head-Product and Innovation, Policybazaar.com)