Don’t Get Stuck with Copay: Why It Might Not Be the Best Option for Health Insurance
This article dives into the concept of copayment (copay) in health insurance and explains why it might not be the best choice for everyone, even though it lowers your premium.
What is Copayment?
A co-payment is a fixed amount that you agree to pay upfront for health insurance coverage. It works on the cost-sharing model between the policyholder (you) and your insurer. So, it works like your insurance covers a portion of the bill (70 – 80% of the hospital bill), and the rest (30 – 20% of the hospital bill) will be paid from your pocket as the copay amount.
Usually, a copay range falls between 10% and 30% of the total hospital bill, depending on insurers.
Let’s understand why Copay is not the right choice to opt for a health insurance plan with a calculative example for reference;
Assuming that you have a health insurance policy with a 25% copay clause. And you raise a claim for a hospital bill of ₹2.5 lakhs. Here’s how copay would work:
- Sum Insured = ₹ 5,00,000
- Room Rent = ₹ 5,000 per day
- No of days hospitalised = 5 days
- Copayment percent = 25%
Here’s the breakup of copayment cost:
| Particulars | Paid by patient | Paid by Insurer |
| Doctor Charges | ₹ 12,500 | ₹ 37,500 |
| Room Charges | ₹ 6,500 | ₹ 18,750 |
| Lab Charges | ₹ 2,500 | ₹ 7,500 |
| Surgery Cost | ₹ 37,500 | ₹ 1,12,500 |
| Medicine Cost | ₹ 3,750 | ₹ 11,250 |
| Total Bill | ₹ 2,50,000 | |
| Split Cost | ₹ 62,500 | ₹ 1,87,500 |
Total Copay: ₹62,500
Even if you had insurance, you’d end up paying a significant amount (₹62,500) out of pocket due to the copay clause.
Isn’t it insane?
Why Insurance Companies Offer Copay
Copayment helps insurance companies to keep their premiums affordable and pocket-friendly. It also encourages policyholders to be more aware of seeking medical care whenever required, which helps in reducing overall healthcare costs. Additionally, copay plans can make coverage more accessible for senior citizens with pre-existing conditions
Why You Might Want to Skip Copay
As we already know copay reduces your monthly premium, and it can also lead to a significant out-of-pocket expense when you need medical care, which is illustrated in the above calculations. So, here’s why you might want to consider avoiding copay:
- Unexpected Medical Bills: Medical emergencies are rarely planned, and copay can add financial stress during a difficult time.
- Misunderstanding Copay: Many people underestimate the potential cost of copay and might be surprised by the amount they owe during a claim.
What do we suggest?
We highly recommend people prioritize for comprehensive coverage over a lower premium. Opting for a plan without copay ensures you’re not liable for any out-of-pocket expenses during a claim, providing greater financial security in case of unexpected medical needs.
Remember:
- Carefully review your health insurance policy documents to understand copay clauses and potential costs.
- Choose a plan that fits your budget and prioritizes your financial security in case of medical emergencies.
We hope that this article helped you to understand about copayment in health insurance. We’ve also prepared a Health Insurance Guide for everyone. Here’s the link – https://algatesinsurance.in/products/health-insurance-guide/
