Health insurance plays a vital role when it comes to safeguarding the health of individuals and families without worrying about inflated medical expenditures.
However, for lower and middle-class families, bearing the cost of high premiums or covering complete medical expenses can be challenging. It is where copayment, commonly known as “copay”, comes into play to solve this concern. A copay in health insurance plans is the agreement between the policyholder and the insurer in which the policyholder pays the percentage of their medical claim, and the insurance company covers the rest.
In this article, let’s delve more into the concept of copay in health insurance, how it works and opting for this provides the benefits of health insurance plans.
What is Copay in Healthcare Insurance?
Copay is the word if dissected into, the root meaning of a combination of two words: ‘co,’ which means jointly or together, and ‘pay,’ which means payment. If combined, the copay in a health insurance plan means paying together both policyholders and the insurer. According to the copay clause, the policyholders have to pay a fixed percentage of the medical claim themselves, and the insurance company covers the rest.
Let’s understand it with an example.
Suppose Mr Govind Gupta bought the copay medical policy of ₹5 lakhs from Tata AIG insurance providers in 2022. He agreed to pay the 30% if he ever claimed the future.
But unfortunately, in June 2023, he got a minor heart stroke which cost him an overall ₹3 lakh. Now he can’t make the entire ₹3 lakhs claim from his insurance company. Instead, he has to pay 30% of ₹3lakhs, i.e. ₹ 90,000, from his pocket, and the rest, ₹2.1 lakhs, was reimbursed from Tata AIG.
Is Health Insurance Copay Mandatory?
It is not mandatory to have a copay with all online health insurance plans. Instead, you can opt for it to lower the cost of the premiums.
However, in many health insurance plans, the copay is the common feature which can apply to various services such as prescription medication, expert consultation, and more. Also, checking with your insurance provider is recommended to understand whether copays are mandatory under your specific plan.
What are the Benefits of Opting Copay Health Insurance Policy?
- Copay plans reduce the cost of premiums.
- It works on cost sharing strategy, which helps balance the financial burden between the insurer and the insured.
- Copayments may provide access to essential services without a significant financial burden.
- It helps the policyholder to anticipate their out-of-pocket expenses for medical care.
- It encourages the appropriate use of services, stopping policyholders from unnecessary or excessive medical care utilisation.
- Copay amounts can be tailored to suit the insured’s preferences and needs.
Common Types of Copay in Health Insurance
| Copay Type | Definition | |
| 1 | Fixed Copayment | ● A specific flat fee the insured pays for each service or prescription.
● For example, ₹200 for a doctor’s visit or ₹100 for a generic medication. |
| 2 | Percentage Copayment | ● The insured pays a percentage of the total cost of a service.
● For example, 20% of the cost of a hospital stay or 30% of the cost of a medical procedure. |
| 3 | Tiered Copayment | ● Different copay amounts are assigned to different levels or tiers of services or medications.
● For example, generic drugs may have a lower copay than brand-name drugs. |
| 4 | Specialist Copayment | ● A higher copay for visits to specialists compared to primary care doctors. |
| 5 | Emergency Room Copayment | ● A fixed or percentage copay for emergency room visits may be higher than regular doctor visits. |
| 6 | Urgent Care Copayment | ● A copay for urgent care visits is often lower than emergency room copays. |
| 7 | Prescription Copayment | ● A copay for prescription medications usually varies depending on whether the drug is generic, brand-name, or special. |
| 8 | Preventive Care Copayment | ● Some health plans offer copay-free preventive services such as vaccinations and screenings. |
| 9 | In-Network vs. Out-of-Network Copayment | ● Copayments may vary depending on whether the provider is in-network or out-of-network. |
Conclusion
Copay in health insurance plays an important role in sharing the cost of the medical services between the policyholder and the insurance company. It helps manage medical expenses well, encourages appropriate use of services, and makes preventive care more accessible. Assess your needs and budget, then choose a copayment percentage you can comfortably afford during a medical emergency. Thus, understand the concept and types of copay well and navigate to all its critical points for managing healthcare plans and expenses and for better decision making.
