You buy a health insurance policy with the thought that it will offer you financial protection if you undergo hospitalisation in the future. For instance, say you choose a sum insured of INR 5 Lakhs thinking if ever you undergo an expensive surgery and the hospital bill amounts to INR 5 Lakhs, it will help you cover the entire bill. 

Health insurance, however, doesn’t work like that. Most policies come with cappings and clauses that limit the amount you claim - and you get back only a part of the claim amount even though your hospital bills are within your base sum insured. Some of these cappings and clauses include the room-rent limit, disease-wise capping, copayment clause, and so on. 

In this article, we discuss the copay clause in health insurance - how it works, its types, and more.

So, let's begin! 

What Is Copay In Health Insurance? How Does It Work?

Copay is essentially a predetermined % of your approved claim amount that you'll have to bear yourself. The rest will be paid by the insurer. 

For instance, Rohit buys a health insurance policy with a sum insured of INR 10 Lakhs. His policy has a copayment clause of 10%. He undergoes hospitalisation for heart surgery and -

• His hospital bill amounts to INR 5 lakhs. 
• There were deductions on non-medical items worth INR 25,000.

So, the total amount payable to the hospital is INR 4,75,000 (5,00,000 - 25,000). Out of this, Rohit will have to pay INR 47,500 out of his pocket (10% of 4,75,000). And, the insurance company will pay the remaining amount of INR 4,27,500.

Types Of Copayment In Health Insurance 

There are 3 main types of copayment in health insurance - 

1️⃣ Mandatory Copayment 

A few health insurance policies, especially those for senior citizens, come with a mandatory copayment clause. For instance, Care Insurance in its Care Plan has made copayment of 20% mandatory for health insurance policies bought for people who enter the policy at  61 years or more. 

2️⃣ Voluntary Copayment

Some insurance companies offer you the option to voluntarily opt for the copay clause with your health insurance policy and as a result, reduce your premium amount. Depending on the insurer you buy your policy from, you may have to bear 10-20% of the claim amount if you undergo an inpatient hospitalisation before the insurer will chip in and pay the remaining claim.

3️⃣ Zonal Copayment 

If you buy health insurance from Tier II or beyond, insurers may impose zone-based copayment. The copayment limit and premium discount may differ depending on the city you live in. The copay limit may also vary based on the city you pay the premiums in, and the city you get hospitalised in for treatment.

Here's how much copay % is applicable under Aditya Birla's Activ Health Platinum Advanced Plan for treatment in different zones, and for a sum insured of INR 3 Lakhs and below.

• Zone II to Zone I: If you buy a plan and pay the premiums in Zone II, but get treated in Zone I, 10% copay will be applicable. So, you'll have to pay 10% of the claim amount and the remaining 90% of the claim amount will be paid by the insurance company.
• Zone III to Zone II: If you buy a plan and are paying the premiums in Zone III, and get treated in Zone II, 15% copay will be applicable. So, you'll have to pay 15% of the claim amount and the insurer will pay the remaining 85% of the claim amount.
• Zone III to Zone I: If you buy a plan and pay the premiums in Zone III, but get treated in Zone I, a copay of 25% will be applicable. So, after you pay 25% of the claim amount, the insurance company will settle the remaining 75%.

Please Note:

1- Under Aditya Birla’s Activ Health Platinum, no copay will be applicable if you choose a sum insured of INR 4 Lakhs or more. And, Aditya Birla will decide the discount on premiums in all the above cases. 

2- Different insurance companies will have different copayment clauses.

Does Copay Help You Save Premiums?

Most senior citizen health insurance plans or insurance policies that provide coverage to people with chronic diseases have a copayment clause to ensure the plan is affordable. Since you and your insurance company will be jointly bearing the hospitalisation expenses, health insurance policies that come with a copayment clause tend to have lower premiums than the ones that don’t have the copay clause. 

Should You Buy A Policy With Copay? 

While you’ll save on premiums if you buy a policy with copay, don’t forget you’ll also have to bear a portion of the hospitalisation expenses at the time of claim. With the cost of treatments and medical inflation rising year by year, it might become difficult for you to afford such copayment costs. 

And if you don’t have a healthcare fund, it could burn a huge hole in your pocket and exhaust you financially. So, as far as possible, try to buy a health insurance policy without copay. However, if you don’t have a choice at all - that is, you’re not able to get a policy without a copay due to age or health-related reasons, ensure you buy a policy with the lowest copay available. 

3 Important Things About Copay You Should Note

1. Copay is not applicable on the entire expenses you claim - it is applicable on the approved claim amount. Say you claimed Rs. 5 Lakhs, but the insurer only approved Rs. 4 Lakhs. The copay will be applied on the approved amount before copay - which is Rs. 4 Lakhs.
2. Once you opt for a voluntary copayment clause, it cannot be removed or opted out of later.
3. Copay only reduces the claim you make under your policy. It does not reduce your sum insured.

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