Copay in Health Insurance: Its Meaning, Features, and Benefits

Copay in Health Insurance: Its Meaning, Features, and Benefits

Bajaj Finserv Health
February 16, 20225 mins read

Key Takeaways

  • Copay in health insurance is an important clause related to claims
  • Having copay in health insurance means you will pay a lower premium
  • A clause of copay in health insurance will have no effect on the sum insured

Health insurance policies have now become a necessity. Not only do they secure your health, but also you can claim tax benefits against them. But, the terms used in health insurance may make purchasing it a difficult task. Sum insured, premium, deductible and copay are often used terms in health insurance. It is important to understand their nuances so that they don’t appear as jargon while you are buying health insurance. 

This article will explain what is copay in medical insurance, its features and its benefits. Read on to learn more about the meaning of copay in health insurance, as well as its importance.

What Is Copay in Health Insurance?

It is important to understand what does copay mean in health insurance to know how it affects you and your policy.

Additional Read: High and Low Deductibles in Health Insurance

Copay in health insurance means the percentage of the claim amount that you will have to bear. This percentage is pre-decided at the time of purchase of a policy. Many insurers have a mandatory clause of co-payment in their health plans, while some have an opt-in option of copay in medical insurance. Having a copay clause may also impact the premium amount of your policy. As the liability of the insurer gets shared, the premium of a copay policy may be lower than the one without a copay. You may better understand what is copay in medical insurance with the example given here.

Consider that you have bought health insurance with a 10% copay agreement. Now, with a claim of Rs.1,00,000 and a copay of 10%, you will have to pay Rs.10,000 and the insurer will cover the rest Rs.90,000. 

Copay in health insurance

What Is the Definition of Copay in Health Insurance?

To define copay in health insurance, the IRDAI has officially stated, “It is a cost sharing requirement under a health insurance policy that provides the policyholder or insured will bear a specified percentage of the admissible claims amount. A co-payment does not reduce the sum Insured.” [1]

What Is the Benefit of Copay in Health Insurance?

Now as you know what is meant by copay in health insurance, you must know the benefits it offers. Here the financial risk of a claim is shared by both the insurer and insured. The clause of copay in medical insurance means that you will pay a lower premium amount. A high percentage of copay will reduce your premium because the financial risk gets shared. 

This means that your premiums will be lower as compared to a policy with no copay. Senior citizens may also avail the low-premium benefit by choosing copay in medical insurance. This will allow them to get an adequate sum insured without the added burden on their finances.

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What Are the Features of Copay?

Here are some important features of copay in medical insurance that you should keep in mind

  • With copay, the insurer will still cover the majority of your medical expenses 
  • The percentage of copay will depend on the type of medical service you avail
  • A copay clause is usually present in health insurance policies for senior citizens because of the high financial risk
  • If you opt for a high copay percentage, your premiums may reduce significantly
  • Copay in medical insurance is more common in metropolitan cities due to the cost of treatment 

What Is the Importance of Copay in Health Insurance?

The importance of copay in medical insurance for insured and insurer is as follows: 

  • It shares the risk between the insurer and insured
  • It lowers the premium and reduces the financial burden of the insured
  • It ensures that there is less misuse of health insurance
  • It reduces the unnecessary use of luxurious facilities
Additional Read: Health Insurance Policy

What Is the Difference Between Deductible and Copay Definition in Health Insurance?

Knowing what is deductible and copay in health insurance and their differences will help you make an informed decision. According to IRDAI, the deductible is a cost-sharing requirement under health insurance. In this, the insurer is not liable for cover unless the insured meets the pre-decided limits. Only after meeting the limit, the insured will be able to avail the benefits of the policy [1]. 

This means that though none of them affect your sum insured, they will affect your expenses. With the deductible clause, the amount that you will have to bear will remain the same, regardless of your claim amount. Whereas, if you choose a copay policy, the amount will vary depending on your claim amount. 

Armed with this information, make sure you have a fair understanding of all the terms and conditions before you purchase health insurance. Talk to your insurer and know all the copay terms of the policy offered. If you are thinking about purchasing a health insurance policy, check out the Complete Health Solution plans offered on Bajaj Finserv Health. The four variants under this plan also come with an option of copay. Apart from individual health insurance, you also get the option of adding your family members under the plan. This way, you can secure the wellbeing of all family members under one comprehensive plan at an affordable price!

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Please note that this article is solely meant for informational purposes and Bajaj Finserv Health Limited (“BFHL”) does not shoulder any responsibility of the views/advice/information expressed/given by the writer/reviewer/originator. This article should not be considered as a substitute for any medical advice, diagnosis or treatment. Always consult with your trusted physician/qualified healthcare professional to evaluate your medical condition. The above article has been reviewed by a qualified doctor and BFHL is not responsible for any damages for any information or services provided by any third party.

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