What if in a riveting cricket match, India chasing a huge score, there is only one main batsman and one bowler left on the crease. Since bowler is less equipped to score big and finish, the main batsman hits the most runs. The bowler just has to make sure he stays on and doesn’t get out in order to ensure a win. This partnership applied in a medical insurance is what co-pay is all about. While co-pay is a condition that some companies apply in few of their policies, it is not mandatory that each or every policy include co-pay. When your insurance company feels you should opt for co-pay, they essentially want you to pay a certain percentage of the bill, while they take care of the rest.
What is co pay?
Technically explained, Co-pay is a portion of a claimable bill that you, as a policyholder, agree to bear from your own pocket in the event of a claim. If you have a two lakhs cover with a co-pay of 10%, and a claimable hospital bill of Rs. 1.50 lakhs, then at the time of a claim, the amount you would have to bear would be Rs. 15000 while the insurance company would pay Rs. 1.35 lakhs. What insurance companies intend in co-pay. The reason for insurance companies to introduce the system of co-pay is pretty simple. You have plans of getting a surgery done and you have two options – a normal average hospital providing good service which costs you Rs. 40,000. And a luxury hospital which does the same surgery for a lakh.
Human tendency is to opt for the luxury services if you are covered by a health policy, and it’s only normal that you would do so. You obviously want to make the best of the policy that you have opted. But, from an insurance company’s perspective, they could be paying you a little more than what’s needed when they can be using that money on another claim that’s equally worthy if not more. In order to ensure that such expenditures are decided upon prudently, insurers brought out the co-pay system which allows the customer to take responsibility of some share of his/her medical expenses.
The belief is that, when some of your own money is at stake, the choice you make would be a practical one. The offshoot of co-pay allows insurance companies the leverage to introduce new policies and better features. Thus, such an insight shown by a customer also gets well rewarded when insurance companies are able to extend efficiency into new and existing customers’ policies. What a customer can benefit from co-pay.
Generally, policies with co-pay tend to have lower premiums as compared to policies without co-pay. So, if you are someone who wishes to save some money, you can choose to opt for a policy with co-pay, under the presumption that only if you have to make a claim in the future do you have to worry about paying a part of your hospital bill. Imagine that you have a policy worth 5 lakhs, with a co-pay option of 20% which gets you a discount of about 15%-20%. The amount of money you shell out would be Rs. 1 lakh and that would also be only in the event of a claim, at that. So typically, you may feel that for a claim of 5 lakhs, you can afford to ante up a lakh from your own pocket, since in the bigger picture, the policy would cover the maximum share and might also allow you a discount on your premium.
But on the other hand, if you feel you do not want hassles of this part payment, that you rather have the option of your insurance company footing your entire hospitalization even if it entails normal premiums, then you should certainly look for the other policies without the co-pay condition. The Star Health Red Carpet policy is a good example of co-pay. The main aspects that play an important part in influencing a policy are the medical test and the premium. So, the Red Carpet policy, by ridding the policy of a medical test and offering a low premium, have equalized the efficiency of the policy by introducing co-pay, making it more accessible and affordable for a select pool of people.
What are the types you co-pay you should know about?
There are four important ways in which co-pay will figure in your health policy. And it is absolutely mandatory that you understand the way it works before you buy the best policy that you need.Zone related co-pay: You may have taken a policy in Pune and the insurance companies have quoted your premium and discounts based on Pune. But then, you get hospitalized and treated in Mumbai. While your premium and insurance related expenses are based on Pune, a city that has cheaper medical facilities compared to Mumbai, you are claiming for higher rates. Insurance companies apply co-pay where you pay some percentage of a claimable bill, when such a situation arises, in an effort to equalize some amount of a claim. New India applies up to 20% co-pay on their
Mediclaim 2007 and Mediclaim 2012 policies.Network hospital related co-pay: Insurance companies have tie-ups with certain hospitals with contracted rates which they call network hospitals. When you step out of this network that your company has set up, and get treated in a hospital outside of it, they ask you to share a certain percentage of the bill. If you prefer to get treated from such a hospital for personal reasons, it’s fair that you pay a minimal percentage of the bill. Bajaj Allianz applies co-pay of 20% in its
Silver Health plan for senior citizens when they get treated in a non-network hospital. But a waiver of this co-payment is available if they choose to pay additional premium. Age related co-pay: The age limit in this co-pay is usually specified and varies by the insurance companies. There are two possible ways where the age-linked co-pay applies itself in policies. When you have taken a policy at a younger age and co-pay is exercised on all claims only when you cross the specified age limit. 3b. When you enter a policy at the specified age mentioned by the insurance company, and co-pay is exercised on all your claims right from the beginning.
There are quite a few companies offering age-related co-pay.
L&T’s Medisure Classic applies 10% co-pay for members over 80. Religare applies 20% copay in its policy Care, for members who enter it post age 61. On the other hand,
MaxBupa’s Heartbeat Health plan applies 20% co-pay on a member entering the policy at 65, but reduces the percentage by 5% each year. So, effective by the time he/she is 70, the co-pay option is removed. Even if you are 63 while entering the policy, at 65 you only pay 10% of co-pay on your claims. Pre-existing diseases related co-pay: When insurance companies exercise co-pay on certain ailments that are pre-existing, it becomes co-pay linked to just pre-existing diseases (and not all claims made). The Star Health Red Carpet policy covers all pre-existing diseases with a co-pay of 50% right from the second year of the policy start and a co-pay of 30% for other specified ailments from the very first year itself! If you are thinking about taking a health policy, it’s not mandatory that it should include co-pay. You might just be so lucky if your company doesn’t include a the clause on your policy. But despite that, if you have found your perfect tailor-made policy and it includes co-pay, this article should help you decode the clause that your insurance company practices. If you think that this feature still continues to be a mystery, just holler to us at Coverfox and we will be glad to help.