Proposed 10% Co-Pay on Health Insurance Claims: What It Could Mean for Policyholders

What Is the Proposed 10% Co-Pay in Health Insurance?

In a recent article published by Times of India, non-life insurers are considering a 10% co-pay on admissible inpatient hospitalisation costs in retail health policies. The policyholder's co-payment would be capped at ₹5 lakh per claim, and annual premiums could be lowered. The idea comes with plans for common hospital empanelment and a formal way to settle disputes between insurers and hospitals.

The proposal comes from non-life insurers through the General Insurance Council (GIC), not from IRDAI or the government. It was discussed at a meeting of insurers with the General Insurance Council (GIC), the industry body for general and health insurers.

How Would a 10% Co-Pay Work?

A co-pay is a fixed share of the admissible claim that you pay. The insurer pays the remaining share.

Here is a simple example:

• Admissible claim: ₹2,00,000

• 10% co-pay (your share): ₹20,000

• Insurer's share: ₹1,80,000

Note: The actual settlement depends on admissible expenses, your policy wording and the final framework.

Would the 10% Co-Pay Apply to Every Health Insurance Claim?

The reported scope has five parts. Each one decides whether a claim of yours would carry the 10%:

• Inpatient claims only: The proposed co-pay would apply to covered hospitalisation following an accident. OPD consultations and other outpatient care would not fall under this reported scope.

• Accidents included: Hospitalisation after an accident counts as an inpatient claim, so the co-pay applies there too.

• Cashless and reimbursement: The claim method does not change anything. In a cashless claim, the insurer settles its share with the hospital, and you pay the rest. In reimbursement, you pay first, and the insurer returns its share.

• Retail products: The reported proposal covers retail indemnity policies, retail-under-group policies (individual cover sold under a group policy), the indemnity part of combi products, internal migrations (moving to another product of the same insurer) and portability (moving from another insurer).

• No waiver: You would not be able to reduce or avoid the co-pay, or recover the amount through another health insurance policy. Even if you have two health insurance policies, you would still have to pay the 10% co-pay yourself.

Why Is a 10% Co-Pay Being Proposed?

Cost-sharing is not new. An insurance expert says insurers already sell health insurance plans with co-pay between 10% and 30%, and plans with no co-pay at all. Co-pay health insurance usually comes with a lower premium in return for sharing the claim.

Here are the reasons given for the proposal:

• Hospital stays and tests: The reasoning is that a patient with comprehensive cover can see longer stays and more tests or procedures.

• Cost awareness: Industry participants say a co-pay would make policyholders more careful about expenses such as room rent.

• Rising claims: In its circular of 30 January 2025 (IRDAI/HLT/CIR/MISC/27/1/2025), IRDAI said hospital package rates are not standardised across health insurance products, unlike PMJAY. It asked insurers to work on common empanelment and negotiate package rates on PMJAY lines.

Insurers and hospitals read the cost trend differently. In 2025, insurers put medical inflation at 14% to 15%, while hospitals argued it was in single digits, citing CPI data as per Business Standard. The data, as per MoSPI's CPI release for August 2026, show health inflation at 1.34% and inpatient care services at 1.53% (provisional). The two figures come from different sources, and the industry has not settled on one.

How Could a 10% Co-Pay Affect Policyholders?

Higher Out-of-Pocket Expenses During a Claim

With a 10% co-pay, you pay ₹30,000 on a ₹3,00,000 admissible claim, while the insurer pays the remaining ₹2,70,000. While the annual premium may be lower, you will have to pay more from your own pocket when you make a claim.

The Impact Could Be Greater for Large Hospital Bills

A co-pay grows with the bill. Here is an illustration for a ₹5 lakh admissible claim:

• 10% co-pay: ₹50,000

• Remaining 90%: ₹4.5 lakh

These are illustrations, not a guarantee of what you would receive. Deductions such as non-payable items and sub-limits can reduce the amount further.

The Effect May Differ Across Policyholders

The 10% is only one of the amounts that can sit between your hospital bill and the insurer's payment. These factors decide how much you pay in the end:

• Sum insured: A higher cover allows larger claims, and so a larger co-pay in rupees.

• Claim amount: The co-pay is a share of the admissible claim, so it rises with the bill.

• Existing co-pay: The proposal does not say how the 10% would work with a co-pay already in your policy.

• Deductibles: A deductible is a fixed amount you pay first. The proposal does not explain how it would combine with the co-pay.

• Policy exclusions: Excluded expenses are not part of the admissible claim, so the 10% does not apply to them. You still pay them in full.

• Sub-limits: Room-rent or treatment-wise limits reduce the admissible amount before the co-pay is worked out.

• Non-payable expenses: Items the insurer never pays stay with you, on top of any co-pay.

What Does the Proposed ₹5 Lakh Co-Pay Cap Mean?

The ₹5 lakh figure would cap the policyholder's co-pay, not the claim amount itself. It does not cap the claim itself. As reported, the policyholder's share would not go above ₹5 lakh per claim.

At 10%, the cap is reached when the admissible claim is ₹50 lakh. Above that, your share stays at ₹5 lakh.

Note: This table is an illustration. It does not include deductible, non-payable expenses or sub-limits. Do not read the cap in isolation. The final framework has not been published, so the details can change.

How Could the Proposed Co-Pay Affect Existing Policyholders?

Would Existing Health Insurance Policies Be Affected?

The reported scope lists the products covered. It does not say whether existing policies would see the co-pay mid-term, at renewal or only on new business. The proposal does not currently clarify whether the co-pay would apply to existing policies mid-term, at renewal or only to new business. Final applicability would depend on the regulatory framework and any applicable policy changes.

Could the Proposal Affect Health Insurance Premiums?

The proposal says annual premiums would be lowered, although no specific reduction has been stated.. No figure has been given. Co-pay options today already lower premiums in exchange for cost-sharing. The actual impact would depend on how the proposal is implemented.

What Should Policyholders Do Right Now?

Policyholders do not need to panic or take any immediate action based on reports about the proposal. Instead, you should:

• Keep your policy. Do not change or cancel it because of a report about a proposal.

• Check your policy wording for co-pay, deductible and sub-limits. IRDAI's Master Circular on Protection of Policyholders' Interests requires the Customer Information Sheet to list them in one place.

• Read the renewal notice from your insurer for any change in terms.

• Follow announcements from IRDAI and the GIC for the final position.

Conclusion

The 10% co-pay proposal is still under discussion, and its final form will depend on regulatory approval. For now, policyholders should review their existing policy terms and follow official updates rather than making changes based solely on reports about the proposal.

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