India is one of the countries that is experiencing tremendous growth in the medical space. Several technologies have now come into the space to treat diseases once declared incurable.
However, the cost of these technologies is transferred to the patients and their caregivers. A middle-income person cannot afford to pay for these treatments from their pocket. Hence, having comprehensive medical insurance is quite important.
A health insurance plan covers the cost of any kind of medical treatment you might undergo in exchange for a small premium. You can choose to pay the premium monthly or annually. The small amount you pay as a premium can give you access to free health check-ups, procedures, hospitalisation, etc. However, before you buy any health insurance plan, you must carefully go through the terms and conditions. One such term you might have come across is copayment.
This blog will help you understand the different types of copay in health insurance and how they work.
What is Copayment?
Copayment is a commonly found clause on medical insurance policies. It refers to the proportion of the medical expenses the policyholder must pay from their pocket in case of medical treatment or emergency.
The copayment clause establishes a percentage of the cost that has to be borne by the insured. The insurance provider pays the remaining percentage. Let’s understand this better with an example.
Mr. Amit has health insurance with co-payment terms of 20%. He goes through a medical procedure and files a claim for Rs. 5,00,000 to cover the cost of the treatment. He will have to co-pay Rs. 1,00,000 out of the entire amount, and Rs. 4,00,000 will be paid by the insurance company.
Types of Copay
There are different procedures for implementing a co-pay for the person buying the health insurance policy.
1. Non-Network Hospital
A copayment policy comes into the picture if the insured avails of treatment at a hospital that is not a part of the network of hospitals covered by the insurance company. You might have to make a considerable co-payment as it is a non-network hospital. Therefore, before you get admitted, you should reach out to your insurance provider to understand the co-payment terms.
2. Hospitalisation in Another City
The insured will have to co-pay if they avail of the medical services in a tier-1 city while they purchased the policy in a tier-2 city. The underlying reason for such copay in health insurance is that the cost of availing of medical treatments and consultations is quite high in a tier-1 city compared to a tier-2 city. Mostly, the copayment percentage will be stated on your policy documents for such a situation.
3. Already Existing Diseases
Copayment clauses are common if you have a pre-existing condition. While there are a few pre-existing diseases that are not covered by any health insurance policies, there are a few that come with a copay clause. You must check your policy documents to understand the copayment terms for pre-existing diseases. There are a few policies that provide complete coverage of pre-existing conditions, and if you are looking for such a policy, you must try to avoid a plan that comes with a co-pay clause.
4. Premium Hospitals
In most cases, the insurance provider will provide you with a list of hospitals that are a part of the provider’s hospital network. If you avail of any medical services that are not a part of the network of hospitals or are quite premium, you may have to copay for the treatment. These hospitals are expensive compared to regular hospitals as they have high room rent and consultation charges.
For instance, a regular room for hospitalisation will cost the insured around Rs. 3,000 in a regular hospital. However, the rent increases to around Rs. 7,000 to Rs. 8,000 if you receive medical treatment at a premium hospital. Therefore, you must check the copay clause for these premium hospitals if you don’t want to burn a hole in your pocket.
How Does Copay Work?
There are two ways of availing of the benefits of a health insurance policy: cashless treatment and reimbursement of expenses. In the case of cashless treatments, the insurance company directly settles the total expense incurred during the treatment of the insured. However, in the case of the reimbursement model, the insured needs to pay for the expenses and submit the bills to the provider for reimbursement.
Insurers who choose a high copay percentage will pay a low premium on their policy. However, the insured will have to pay more when filing the claim. Similarly, if the insured goes with a policy with a lower copay, the premiums will be higher, but they will have to pay a small portion of their medical expenses.
In Conclusion
Understanding copay in health insurance is a very important factor when you are buying a health insurance plan. Copayment is preferred by young people who face fewer threats in terms of diseases, etc. However, senior citizens prefer a policy with a low copay as they are more prone to diseases and ailments. Reach out to your insurance provider and check all the clauses related to copayment before buying the policy.
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