What is Co-payment in Health Insurance?
Health insurance plans are one of the best investments you can make in today’s time, not only for your health benefits but also other kinds of tax benefits from the policy.
In recent years, medical expenses have been seeing an upward trend. The medical charges are making it difficult for people to get proper medical care at reasonable charges. This is where medical insurance comes in. Before you start looking for health insurance policies online, you need to get familiar with and have a basic idea of how this health insurance works. You might have heard the term copay, but what does copay mean in terms of health insurance?
What is the meaning of Co-pay?
In simple language, copay meaning is the percentage of claim amount you need to bear when you make claim settlements. It is very important to check copay clauses to find out how much you have to contribute for claim settlements in order to avoid any hidden charges.
Health Insurance Copayment
If you have bought a copay health insurance, you will have to pay a part of medical expenses out of your pockets, and the remaining amount will be covered by your insurance provider or company. A lot of health insurance companies have copay clauses in their insurance policies. The amount you would have to copay depends on the type of treatment or medication you will be requiring.
For instance, if your medical insurance policy happens to have copay clauses and asks you to pay 10% of the medical bills on a bill of Rs. 60,000 you would have to copay Rs 6,000 out of your pocket, and the remaining Rs 54,000 would be covered by your insurance provider.
Is Copayment Compulsory in Health Insurance?
Many health insurance plans come with mandatory copayment clauses, but some of them let people opt out of the co-payment clause in copay health insurance. It is very important to check the clauses of your insurance policy before buying it. You may take the help of an insurance agent who can provide you with all kinds of details.
Reasons for Copayment Clauses
One of the obvious reasons why copayment in health insurance will be included as a clause by health insurance providers or companies is to reduce the amount they would be saying when you would make your claims. But there are many other reasons why copayment clauses are included in health insurance –
1. Copayment in health insurance makes people not want to push forward unnecessary health claims as no one would want to pay out of their own pockets for the expensive medical bills. Claims for cold medicine and treatment, as well as claims for frequent gastrointestinal distress, may be charged back to the insurance provider or employer. Small claims can lead to a lot of paperwork which is unnecessary for both the insurer and the other party. The misuse of health insurance policies is limited by the copayment in the health insurance clause.
2. Copay health insurance discourages people from taking medical care at expensive hospitals. Private hospitals are expensive when it comes to medical treatments, and they can take a toll on your insurer. High-class hospitals or health centers can charge you up to 50% more of what you would be paying for the same treatment in a normal hospital. With copayment in health insurance, if you get an expensive bill, you will be paying 10%-20% of that high-class hospital bill. Copay in health insurance discourages the policy bearer from having medical treatments in expensive hospitals and choosing more economical ones.
3. The copay clause in health insurance policies makes people honest and use their medical policies in the right manner. The bearer of the policy knows the fact that they would have to pay a portion of the hospital themselves. This makes them even more alert and careful with their insurance policy. They would use the copay health insurance policy in the right manner.
4. The premium you would be paying on a copay health insurance would be much less in comparison to other policies where all of the medical expenses have to be paid by the medical insurance provider or company. With copayment, you would be sharing more liabilities. The higher the copay percentage is in a health insurance policy, the less premium you would have to pay.
Disadvantages of Copay
While there might be a few advantages of copay clauses for banks and policy bearers, it has its drawbacks such as –
- The objective of a health insurance policy is ruined. If you are paying a higher copay amount, you might be discouraged from getting medical treatment even for life-threatening diseases because of the fear that you would also have to pay for your medical expenses. This kills the main objective of investing in a health insurance policy. The reason why people even buy medical insurance policies in the first place is to reduce the financial burden of medical bills.
- Even though you are paying a lesser premium with copay health insurance, the money you would be saving would completely get used if you do find yourself in the condition where you have to claim your health insurance policy. This makes the benefits from this policy even less worthy of being going for if you want to save money on premiums.
- Copay health insurance plans are not widely preferred by the general public. Anyone who understands the clauses of the health insurance would rather opt for a health insurance policy that covers all of their medical bills.
It is really important to understand the meaning of copay while buying any kind of health insurance, which adds to the clauses of copay. You should consider your medical history and your current health before opting for any health insurance policy. If you are following a healthy lifestyle, the chances of you making an insurance claim are reduced, which might make copay health insurance better for you. Opting for normal health insurance is a better option if you have a history of diseases and are not doing well in terms of health.