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Co-Pay In Health Insurance: The Ultimate Guide

Since the last few years, getting an appropriate insurance policy has become a necessity for everyone, especially for people belonging to the mid-income group. The reason why there is an increase in the demand for an insurance plan is the protection provided by them from the expensive healthcare system. On the one hand, where these policies reduce the financial burden of policyholders, the burden of the insurance companies is increasing. Insurance companies are now using co-pay clauses as their savior to reduce their burden and wondering what is co-pay in health insurance? Here in this article, we have mentioned all about the co-pay clause.

What co-pay in health insurance is referred to as?

When it comes to the co-pay in health insurance, it can be referred to as an arrangement that defines the amount or percentage of the healthcare expenses solely borne by the individual being insured under a specific health plan. And it is the insurance company that will be responsible for reimbursing the remaining amount or percentage of the expenses incurred in healthcare treatment.

You can find several insurance plans having a mandatory clause for the copayment. While other insurance plans allow the individual buying the plan to voluntarily decide. If he or she wants to opt for the co-payment clause. That further provides them the benefit of reduced payment of the premium.

The amount to be paid as co-pay is usually pre-specified for different healthcare services, varying according to the treatment that an individual has gone through, or the medication required.

To better understand the concept of co-pay, let’s take an example. In case you have bought an insurance policy with a sum insured equal to Rs. 1,00,000 having a clause of co-pay of 20%. The expenses incurred on your treatment amounted to RS 60,000. Then in such a case, you are required to pay Rs. 12,000 from your income and the remaining amount i.e., Rs. 48,000 is to be paid by the particular insurance company.

What are the characteristics of co-pay?

Following given are some basic features of co-pay in the insurance policies:

  • This is a special clause mentioned in an insurance plan specifying that it is the policyholder. Who will be paying the specific percentage of the expenses incurred on the medical services apart from the insurer,
  • It is the nature of treatment or medical service availed by the policyholder based on which percentage of claim to be paid under co-pay is determined.
  • Usually, it has been seen that both the terminologies. Co-pay and co-insurance are used interchangeably, having the same meaning in India.
  • There is an inverse relationship between the amount paid as copayment and the rate of premium charged. In simple words, if the policyholder opts to pay the low amount as the copayment. Then the amount of premium paid will be more and vice-versa.
  • This specific clause is specifically used in the policies designed for individuals having age more than 60 years. Also commonly called senior citizens of the country.
  • The applications of the insurance plans having the clause of co-pay can be majorly in the metropolitan cities. As the cost of treatment here is much more compared to the smaller cities.

What are the reasons why the co-pay clause is specified in insurance policies?

Below-given are the main reasons why insurers duly specify the co-pay clauses in different insurance policies:

  • To prevent policyholders from raising unnecessary claims: The most common reason for specifying the co-pay clause is to prevent policyholders from making unnecessary claims on the part of the insurance companies. Now that the policyholder is required to pay the pre-determined percentage of health expenses. They do not file a claim for minor accidents or illnesses, reducing the burden of insurers.
  • To promote judicious utilization of insurance policies: The fact that now policyholders will also have to pay some amount from their income makes them realize. That they should see the medical treatment as the expense that they will also have to incur. As a result, co-pay ensures a sense of ownership among policyholders, and thus. They utilize their insurance plan honestly and judicially.
  • To discourage people from getting expensive treatments: No matter whether the treatment for a disease is small or large enough, policyholders before the emergence of co-pay clause use to get it done from the expensive hospitals increasing the burden on the insurance companies. But now, due to the co-pay clause, policyholders consider their options before getting their treatment done from the expensive hospitals. As they are aware of the fact. That they will have to pay more money from their pocket by getting the treatment done from the expensive hospitals.


Even though you may find insurance policies with co-pay as an affordable option. It is advisable to equip Care Insurance with all your requirements so that you can get the best plan.


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