• A copay, short for copayment, is a fixed amount a healthcare beneficiary pays for covered medical services. The remaining balance is covered by the person's insurance company.
• Copay is a consumer payment for a medical service. The consumer usually pays it at the time the service provider performs their part. It is usually a fixed fee such as a $20 copay for an office visit. The insurance companies often set the copay to represent a small portion of the true cost of a benefit or service.

A fixed amount ($20, for example) you pay for a covered health care service after you've paid your deductible. Let's say your health insurance plan's allowable cost for a doctor's office visit is $100. Your copayment for a doctor visit is $20. If you've paid your deductible: You pay $20, usually at.

Due to medical inflation and the rising cost of healthcare services, the number of people buying health insurance policy has risen significantly today. However, though a lot of people might assume that all medical expenses are covered by health insurance, there are few times or few expenses that are not covered under it. And policyholders have to pay for them from their own pocket. There are several reasons for which this can happen; two of them being copayment or deductible clauses mentioned in their policy.

In this blog, we will tell you what these two terms mean and what is the difference between them.

What is a co-payment clause?

Co-payment are times where the insurance companies pay a part of the claim and the other part of the claim is borne by the policyholder.

For example, senior citizen policies often come with co-payment clauses, let’s understand why. Suppose you buy a senior citizen policy for your mother who has a pre-existing illness. Now, different health insurance policies treat it differently. Usually for pre-existing illnesses, insurance companies put a waiting period, a hibernation period during which you cannot claim insurance for that particular illness, for upto three to four years. But for senior citizen policies, the waiting period is usually low, and sometimes there is no waiting period at all. Instead of waiting periods, the insurance company puts a co-payment clause. That is, in case the policyholder is hospitalised, the insurance company bears a part of the cost, and the policyholder pays a part of it.

It is important to note that the premium amount is lower for insurance policies with co-pay clauses as compared to the ones without copay clauses.

What are deductibles?

Deductible is the amount of money that you agree to pay (as per the term and condition) during the claim process.

For example, if you have a deductible clause of Rs 5,000 in your insurance policy, you have to pay this amount, whether the claim amount is Rs 10,000 or Rs 1 lakh. And the rest of the expenses are borne by the insurance company. Deductibles are included in health policies to discourage policyholders to make repeated or very small claims.

Like policies with co-payment clauses, the premium amount for policies with deductible clauses are also lower than the once without deductible clause. .

How co-payment and deductible are different from each other?

Policyholders often get confused between co-payment and deductible because both require them to make payment during the claim process. But these two clauses are completely different from each other. Deductible is a fixed amount, like Rs 5,000 or Rs 10,000, that you are required to pay before the claim process arises. The rest is covered by the insurance company if the amount is within the coverage limit.

Meanwhile, in case of a policy with the copayment clause, you will have to bear a portion of the expenses in a 70/30, 40/60 or 80/20 etc. ratio.This ratio is decided between the insurance company and the insurance company and the policyholder.

Let’s suppose you have an insurance plan with a co-pay structure of 70/30. Now, in case the bill amount is Rs 1 lakh, the insurance company will pay Rs 70,000 and you pay Rs 30,000.

What Does Copay Mean In Health Insurance

Bottom Line

To avoid confusion about these things and make the claim process smooth, it is important to read the policy paper carefully. Look for the terms and conditions that are stated in it. Learning about such clauses beforehand will help you plan the expenses earlier, rather coming to know about them during the time of payment process.

According to WHO, almost 70% of the Indians spend a huge chunk of their income on healthcare and medicine expenses. These days it is almost impossible for the middle income and the lower-middle-income group to bear the cost of healthcare expenses on their own. This is why it is necessary for people to get

Health Insurance For Single Person

health insurance by paying their respective agreed-upon premiums in order to avail financial assistance in case of an accident or any other medical emergencies. It is important to understand what is copay in health insurance in order to opt for the right policy.

What is Copay in Health Insurance?

Nowadays, there are a lot of fraudulent activities related to health insurance. Insurance companies have come up with the concept of Copay in order to dissuade an insured from committing fraud. Copay meaning is simple to explain. Copay is a concept that is agreed upon while signing the insurance contract. The clause states that the insured will have to bear a part or a percentage of the claim amount out of their own pockets and the rest of the claim will be borne by the insurance company. The copay percentage agreed upon by the insured varies from 10-30%.

What is Copay in Health Insurance with example?

Well, now that you know what the concept of the copay is, you might be able to connect with the concept more when you understand what is copay in health insurance with example. For instance, If your insurance policy includes the copay clause of 20 percent and your medical expenses amount to Rs. 15,00,000, you will have to pay Rs. 3,00,000 out of your own pocket and the insurer, i.e., the insurance company will cover the rest of the Rs. 12,00,000.

How does Copay work?

There are two types of claims with any health insurance, namely, cashless health insurance claims and reimbursement for the expenses incurred. In case of a cashless payment option, the insurer will directly settle your expenses with the hospital. Whereas, in case of a reimbursement claim, the insurer will reimburse all the expenses that you incurred while you were undergoing treatment at the hospital. Now there are two situations that will occur when you opt for a copay option. If you opt for a higher copay, you will have to pay a lower rate of insurance premium as compared to opting for a lower copay, where you will have to pay more premium against your policy.

Why do insurance companies have Copay clauses?

Apart from the main reason, which is to save its expenses during claims, there are a lot of reasons due to which insurance companies have copay clauses.

• To discourage people from unnecessarily going to expensive healthcare centers for their treatments. With copay, the insured will be mindful of their spendings as even they will have to bear a portion of the medical expenses that will occur from these treatments.
• To dissuade people from making unnecessary claims, such as, dermatologist’s appointments, cold, gastric treatments, etc. Copay insurance dissuades insured from misusing their insurance policy.
• To prevent fraudulent behavior amongst the insured.

What are the disadvantages of copay? While a lot of companies opt for the copay clause, there are a lot of insurance companies who choose to not add a copay clause in the insurance policy because of various reasons.

• Instances, where the insured has to pay a high copayment amount, may dissuade the insured from seeking proper healthcare attention when they need it, which defeats the entire purpose of buying an insurance policy.
• While high copayment allows an insured to pay a low premium, the insured will still end up paying more as copayment towards their medical expenses rather than what they’d be saving on the premiums.

People who are well versed with medical insurance products and policies will choose not to buy an insurance policy with the copayment clause as they understand that its disadvantages overpower its advantages. FAQs:

• Why do people opt for copay health insurance?

People opt for copay health insurance as they have to pay less premium which makes them cheaper than other insurance policies.

• Is copayment levied on cashless payment options?

In most cases, copayment clauses are levied only on reimbursement options.

Copay Meaning In Health Insurance Coverage

• Are the policies with copay clauses cheaper than the rest?

Yes, policies with copay clauses are cheaper than the other claim settlement options as the liability divides between the policyholder and the insurance company. This proves to be beneficial for both parties.

Copay Meaning In Health Insurance Definition

Conclusion

Copay Meaning In Health Insurance Terms

Copay Meaning In Health Insurance Cost

Safe to say, now you must have gained some clarity about what copay meaning is! You can now make an informed decision while purchasing a health insurance policy and choose to opt for a copay option knowing all the pros and cons of the concept.