Co-Payment and Deductible: Meaning and Comparison in Health Insurance

Health insurance is a prime necessity for one and all. However, due to the complex policy terms and conditions common people get apprehensive while purchasing insurance. This is because of the lack of knowledge and awareness of people in general about insurance policies.

Even when people purchase a policy, they depend entirely on recommendations and word of mouth of either the policy agents or the people in their close proximity who have used such policies. Thus, most people buy policies without enough knowledge about the same, or without going into in-depth details of the policy.

Further, there are some specific features of health plans that tend to make people all the more confused. But, it is important to know such features while buying an insurance plan to be able to understand your plan and get the desired benefits. Co-payment and deductible are two such important features that you must be aware of. These two features come under fixed costs and do not change with the changing cost of the health care service/policy.

Read on to know about co-payment meaning and other details about co-payment and deductible in the article ahead.

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What do you mean by Co-payment in Health Insurance?

Co-payment, also known as co-pay is an insurance feature. This is a fixed amount that policy owner has to pay for receiving a specific health services, while the remaining amount of co-pay is done by the insurance company, from whom you buy the policy.

Thus, co-pay is like an agreement where insurance holder is required to pay an amount of the medical costs and the insurance provider pays the remaining amount on behalf of the policy owner. The arrangement in co-pay is accomplished with certain clause, which binds both the consumer and the insurance company.

For instance, if you buy a medical plan with the co-payment feature, you pay different amount for different services such as – Rs. 500 for general physician, Rs. 800 for specialist caregiver, Rs. 200 for prescription etc.

So, when you visit a specialist, may be a cardiologist or anyone else, which costs you Rs. 800, then you pay a certain amount of the visit, while the remaining amount is paid by your insurance provider. Here, you may be paying Rs. 600, and the insurance provider will pay the rest Rs.200. Further, if you visit the same caregiver again and again, the same rule will follow for every visit. Thus, in co-pay the payment is shared between the insured and the insurer on the basis of each visit at the caregiver.

Co-pay in health insurance is a feature, which you can use to your advantage if you have good knowledge about the same.

What do you mean by Deductible in Health Insurance?

Deductible is the fixed cost that a policy owner is expected to pay to the health insurance provider before the company starts covering him/her under the policy. This amount is paid by the insured person within a particular period, normally one year. The insurer starts covering you for your health expenses once this deductible amount is exhausted within the specified period.

Deductible is a non-refundable cost and is paid on yearly basis. The insured person is likely to pay deductible even if they don’t claim any medical coverage for the year. Also, depending on the amount paid as deductible, the rate of your premium varies; for high deductibles, the premium is low and for low deductible, the premium is high. Deductible amount for personal coverage and for family coverage stays different.

For instance, if the deductible for a plan is Rs. 20,000, then the insured person has to pay for all his treatment from this amount till the amount is exhausted. Now, suppose by the end of the period only Rs. 5000 is remaining of the deductible and you claimed for a treatment for Rs. 8000. In that case, the insurance provider will pay Rs.3000 out of the Rs. 8000 of your claim, as your deductible for that particular period is met.

Thus, a deductible can come to your aid when a disaster strikes. The amount of the deductible is subtracted from your claim payment when you use it for a medical emergency. This way, you can stay secure of any health crisis that strikes you or any member of your family.

Comparison between Co-payment and Deductible:

• Co-payment is made on every visit basis, while the payment in deductible is made on yearly basis.
• Co-payment is an ongoing process, while in case of deductible if the amount is met, you don’t have to pay till the next year.
• Co-pay normally offer lower payments, (depends on insurance provider), while in deductible you pay low premium if your deductible amount is high.
• Co-pay is generally used for regular check-up, preventive checkup etc., while deductible is normally applied for surgeries, blood tests, diagnostic charges and so on. Also, it is used for implanting devices like pacemaker and for hospitalization expenses etc.
• The larger the amount of deductible, the less you pay in premiums and if the amount of deductible is less, you pay more premium.

Conclusion

Co-payment and deductible are two features that offer cost sharing process. Insurance companies provide these features to split the cost of medical care, which is to be shared by both policy owner and the insurance companies. Payment in co-pay is based on every visit, while the payment in deductible is an annual payment.

However, it is important to understand these features well to be able to use them in a proper way. Unless you know the meaning of co-pay and deductible in the true sense of the term, you will not be able to benefit from it.

If you know these features well, you can take advantage of such features to make your health insurance policy worthwhile.

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