All about co-payment in health insurance

Do you own health insurance? If not, you must. The high medical costs can be heavy on your savings. The health coverage will take care of the medical expenses. Hence, no money stress. Also, you don’t have to worry about the future of your dependents. In case of an unfortunate event, the sum assured will take care of their finances. But these perks are not for free. The insurance company will charge a premium for these. The premium amount depends on how much coverage you want. It will also depend on your health issues.

Now, you may need a higher level of coverage. But, you may not be able to afford its premiums. In that case, you can opt for a co-payment clause. Many insurance companies offer them.

This article will help you understand the meaning of co-payment in health insurance. 

What is Co-Payment in Health Insurance?

Under this method, the premium payment is paid by two parties. One is the Insurance company. That is common. But, the other is the insured. 

You may be used to the idea of an insurance company taking care of all medical expenses. But this is not the case with co-payment in health insurance. You need to bear a part of the medical cost. You must pay this cost every time you take a health service. 

Now, you may wonder how much you need to pay. The amount is set in your policy. Mostly, you only need to pay a small amount. Here is an example:

Your medical bill comes to Rs. 20,000. Your co-pay part in the policy is 10%. Then, in this case, you need to pay Rs. 2,000. The Insurer will pay Rs. 18,000. 

What are the features of Co-payment in Health Insurance?

• Both the insured and insurer pay the premium. 
• The insurer pays the major cost. 
• The risk is low for the insurer. 
• The co-pay may vary with the risk and premium. 
• It is more common in big metros.

Advantages and Disadvantages of Co-payment in Health Insurance

Now, let’s know the pros and cons of co-payment in health insurance. 

Pros

• Low premium: You may have just started working. It may be you have other payments lined up. Hence, you may not have spare funds to pay for premiums. Under co-pay, you only need to pay a part of the premium. The major cost is taken care of by the company. Hence, you get a good cover at a low fee. 

• Better discounts: Under co-pay, the insured also pays a set fee for the health costs. Hence, the risk of insurers is low. Thus, they may offer some perks like discounts. You may get a better deal on the cover.  
• Less risk: This pro is for insurance companies. The insurance company’s loss depends on how many claims they have to settle.  Higher the claims, the higher the loss. With you paying a part of the premium, their claim liability reduces. They don’t need to pay the full cost of claims. Hence, the overall risk is low. 

• Only relevant claims: It is common for the insured to file claims for small health issues also. Like, a cold or cough. Now, claims require heavy paperwork and relevant documents. Hence, it’s not a simple process. With more paperwork needed, it will prompt them to file honest claims only. 
• Reasonable health care: If you go to a high-end place for your health care, it will charge a bomb. But, if you go to another facility, they will charge a nominal fee. When insurance companies pay the bills, insureds may opt for more luxury care. But, under co-pay, they must pay a part of the bill. Hence, they are more likely to go to the local health centre.

Cons

You are aware of the pros. Now, let’s talk about why co-payment in health insurance may not be the right option. 

• If you have a critical illness: It may be that you suffer from a critical illness. So, you need regular health checkups. If you opt for a co-pay, you must pay a part of the cost. Paying a small cost every time will become high. Hence, it won’t be useful anymore. It will become a debt. You may be paying more than the premium amount. It will be better to opt for a specific critical illness cover. 

• If the co-pay cost is too high: Medical costs are expensive. Hence, you opt for health coverage. The insurance company takes care of the health costs. Co-pay clause makes you pay a share. But, if it’s too high, the cover is not worth it. The point of taking coverage is that you need support for paying basic medical costs. A hefty co-pay will hamper the whole idea. 

• If the insured is aged: This point is similar to the critical illness one. As you grow older, you may require more health care. Hence, this means more medical costs. In other words, high risk. It won’t make sense to opt for a co-pay in such a case. 

Final thoughts

The above blog helps you understand all about co-payment in health insurance. It has its pros and cons. But, it should not be the only basis for picking a policy. There are many things to consider. Know the claim process, inclusions and exclusions of the policy. Also, you must look at your lifestyle. Are you healthy with no past medical history? Then, the co-pay policy is a good pick. If not, pick a policy without it. 

Now, you may need finances for its premium payment. Apply for a personal loan. Consult a financial expert like Piramal Finance. They can help you pick the right loan. If you are working, you can opt for a professional loan.