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Updated on Nov 29, 2022
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One thing that’s out of our league is “what will happen tomorrow?” To save yourself from financial crippling due to sudden healthcare emergencies, insurance is what you need. However, it is essential to understand all the clauses and terms while you are planning for it. A copay may look like a common insurance term, but there are many who do not fully understand it.
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In a health insurance policy, the copay is a clause added by the company in their policy terms. In layman’s language, the copay is the percentage of the amount that an insured person will pay as a part of the claim of the insurance. If you agree to copay 10% of the claim, this means that in case you make a claim the company will pay 90% of the amount towards the medical expenses and 10% will be borne by you.
It is quite obvious that the copay amount is inversely proportional to the premium that an insured person pays. The higher the copay, the lower the premium you have to pay. There are several features of this term, like-
It is quite easy to understand what is copay in health insurance and how it works! As aforementioned, it is the percentage of claims that as an insurer you will have to pay. For instance, suppose you agreed to 10% of the copay amount. In such a case, if your medical bill is INR 1 lakh, you will have to bear 10% of it, i.e. INR 10,000. The rest of the INR 90,000 will be paid by the company.
After understanding what is copay in health insurance, one obvious question that may come to your mind is, why do the companies levy co-pay? Here’s the answer:
Are you wondering if copay and co-insurance are the same things? Well, to a great extent, they are the same. In copayment, the clause mentions a fixed percentage of the amount that the insurer has to pay. However, in co-insurance, the ratio of the amount is mentioned like 10:90, 20:80, 40:60, etc. whereas, in the case of copay, the numbers are taken to be a percentage.
Another important term that you come across in health insurance is “deductible”. So, what is deductible in health insurance? While on one hand, the copay is the percentage of the claim for every medical claim, on the other hand, the deductible is the fixed amount that an insurer has to pay for every medical claim. For instance, if the deductible is INR 30,000, the insurance company will aid your medical finances if only your bill exceeds INR 30,000. This amount is fixed and does not change no matter what the billing amount is.
There are a few factors that every insurer must keep in mind before signing up for health insurance, like:
It is vital to always stick to a trusted company and know all the details of the insurance clauses, terms, and conditions before signing. As these days health insurance has become inevitable, it is important to have a plan that not only offers you maximum coverage but at the same time is not too heavy on your pocket. You, therefore, need to know your requirements and your budget before you decide on the copay amount.
Also Read: What Is The Importance Of A Health Insurance Policy In Our Life?
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