All you wanted to know about co-payment

Most of us buy a health insurance policy to avoid shelling out money to settle unaffordable hospital bills during a medical emergency, such as a Covid-19 hospitalisation. But while we may assume that we’re fully covered by our health policy, there are situations when we may have to bear part of the bill. One such situation is when your health policy has a co-pay clause. This clause, which is often buried in the fine print, must be evaluated at the time of purchase to avoid burning a hole in your pocket.

Co-pay or co-payment is a clause in a health insurance plan that requires the policyholder to bear a specified percentage of the admissible claim amount. In other words, if your medical expenses work out to ₹50,000 and your health policy has a 10 per cent co-pay, you will pay ₹5,000 from your pocket and balance will be paid by your insurer. Co-payment doesn’t reduce your sum insured in your health policy but only reduces the claim you can make. Insurers including Bajaj Allianz General, Max Bupa Health, Manipal Cigna, Star Health, United India Insurance and Aditya Birla Health are some insurers that have co-pay clauses in some of their policies.

Insurers originally started to levy co-pay clauses as a check against inflated bills and insurance fraud. For insurance buyers, it is one of the important clauses in a health policy they should be aware of before signing up for one. In some health policies co-payment will apply on the total claim amount, while in others it applies on specific medical expenses such as OPD (out-patient department), and daycare procedures. While the applicability of co-pay clause varies with insurers and their plans, there are a few common scenarios where it is applicable.

One, co-pay depending on the location of hospitalisation. If you have purchased a health policy in a non-metro city (tier 2 or tier 3) and get hospitalised in a metro city (tier 1), then many health policies levy a co-pay clause. This is because hospitalisation expenses in tier 2/3 cities are usually lower when compared to tier 1 cities. Co-pay is usually not applicable if you purchase a policy in a tier 1 city (metro) and avail of medical treatment in non-metro cities. Insurers normally don’t apply co-payment for services such as emergency ambulance and diagnostic tests.

Two, co-pay may be applicable based on the age of the policyholders. There are policies which require co-pay only for those availing themselves of insurance above a certain age, say 60 or 65 years. Three, some of the insurers apply co-pay on claims exceeding the room rent limit mentioned in the policy. If your health policy states that your room rent limit is ₹5,000 per day (in case of hospitalisation), then you may have to co-pay if your actual bill exceeds this.

Understanding of the co-pay clause helps you avoid unnecessary financial hassle during illnesses requiring sudden admission. Though co-pay must not be a deciding factor in buying a health policy, it is an important aspect to consider. Health policies with co-pay are often offered at a lower premium. But some insurers leave the choice to the policyholders on whether they would like to do away with the clause and shell out higher premiums instead.

Most health policies launched in the last one or two years don’t have an explicit blanket co-pay clause, but it may apply in specific situations still. This clause could be applicable both on cashless insurance claims and reimbursement claims.

Don’t assume that insurance has got you fully covered.

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