Especially after the pandemic, health insurance has been the need of the hour. In all honesty, you never know when you need protection, and so it’s best to have health insurance as early as possible, as a safety net. But several people disagree.
Among the many, one of the primary reasons people steer clear of health insurance is, “I am healthy and do not need health insurance today.” Some of the other reasons include it costs too much, or a policy I had was not covered satisfactorily, so I have no inclination to buy health insurance again.
Speaking of the latter, one of the reasons for this is people don’t take the time to understand the jargon associated with insurance. This causes you to lose out on some advantageous benefits associated with it. To break this, let’s look at some terminology for better understanding.
What Is Copay?
Insurers introduced this concept because of the number of fraudulent activities that took place.
It’s essentially a form of cost-sharing between the insurance company and policyholder, wherein the policyholder bears a part of the cost out of their own pockets, while the insurer will bear the remainder.
Typically, the premium for policies with co-payment clauses is lesser than those without it.
There are three types of copay:
I. Percentage
In this option, the insured has to bear a certain percentage or a part of the claim amount, while the insurer will bear the remainder. This percentage varies anywhere from 10 to 30%, depending on the insurer to insurer.
To help you better understand, here’s an example.
Say you have an insurance policy with a 20 percent copay clause and your medical expenses cost Rs. 10,00,000 then you need to pay Rs. 2,00,000 and the insurance company will cover the rest which is Rs. 8,00,000. If it’s a cashless claim, the insurer will directly pay the expenses to the hospital, and you can pay the rest. If it’s a reimbursement, the insurer will reimburse the costs to you.
II. Copay fee
Some group health insurance plans come with a fixed fee for specific healthcare services like prescription drugs, doctor visits, etc. Depending on your group health insurance plan and service, the copay varies. The flat fee is fixed regardless of doctor consultation fee, the cost of medicines, etc.
Assume your policy allots Rs. 350 for doctor visits. So, from the total costs you incur, you must pay 350 while the rest will be covered by the insurers.
III. Annual deductibles
Your group health insurance policy can even have an annual copay clause. This will be a yearly deductible you will have to pay for a single year.
Let’s say your policy outlines you have an annual deductible of Rs. 10,000. In the entire year, your medical expenses were Rs. 1,00,000. Then, as the policyholder you pay Rs. 10,000 while the insurer covers the remainder of Rs. 90,000.
How Does Copay Work?
Group health insurance has two types of claims for the expenses you incur, cashless claims and reimbursement. You can read more about it here.
When you opt for copay, you have two choices:
1. When you pick a higher copayment amount - in this scenario your premiums are higher, but you may have to pay more when you make a claim.
2. When you pick a lower copayment amount - you must pay higher premiums, but this reduces how much you pay during a claim.
What’s The Purpose Of The Copayment Clause?
- To prevent small or unnecessary claims and encourage discretionary use of insurance policy - One of the leading reasons for this clause is to ensure policyholders don’t make unnecessary claims. Let’s iterate with an example. Say person ‘A’ wants to make a claim for a treatment where the costs are relatively low. The copay clause ensures the insurance policy is rightly used.
- To avoid fraudulent use of group health insurance claims - With the copay clause requiring you to pay a certain amount from your pocket, it ensures honest and judicious use of the policy.
- Makes you look at all options before you opt for healthcare - With the rise in medical costs, it’s better to be cautious about where you seek treatment. Of course, you should opt for the best but that needn’t be the most expensive.
In case you have a copayment clause of 20%, as stated earlier, it will ensure you consider all your options before you pick a place for treatment or hospitalization.
Advantages Of Copay
One of the significant advantages of copay for group health insurance policies is that it lowers the premiums you pay. Even though you have to pay a certain portion or percentage of the claim amount, in the long run, copay reduces your expenses.
Is Copay For You?
A group health insurance policy offers coverage for more than just hospital bills. Not only does it serve as a safety net at a time of need, but it also comes with several features like free OPD cover, round-the-clock care, holistic wellness, and more, especially with partners like Loop Health.
In culmination, although group health insurance plans with copayment clauses can seem much more affordable, it’s essential you determine and understand your requirements before you make a decision.
Our team of experts at Loop Health have all the answers to your copayment related questions. Reach out to us and get in-depth guidance, including filing claims and purchasing policies. Alternatively, the Loop Health app has all this and more!. Click here to know more
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