Co-payment

Co-payment (or co-pay) is a cost-sharing arrangement in a health insurance policy where the insured person pays a fixed percentage of the medical expenses out of their own pocket, and the insurance company pays the remaining percentage.

For example, a 20% co-pay on a ₹5 lakh hospitalization bill means you pay ₹1 lakh and the insurer pays ₹4 lakhs. Co-payment clauses reduce premium costs and are common in health insurance policies for senior citizens. What is a Co-payment? Co-payment is typically expressed as a percentage, say 10%, 20%, or 30%, of the admissible claim amount. It can also be a fixed rupee amount per claim. Co-payment is applied to every claim, unlike a deductible which is typically annual. Many health insurance policies for individuals above 60 years include a mandatory 20% to 30% co-payment clause because older individuals are statistically more likely to file claims. For instance, if you have a health insurance policy with a 20% co-pay clause and you are hospitalized for a surgery that costs ₹4 lakhs, you will pay ₹80,000 (20%) and the insurer will pay ₹3.2 lakhs (80%). This amount is deducted from the sum assured, and you must pay it at the time of discharge from the hospital. Co-payment is particularly relevant for treatments at certain hospitals. Many policies have a "preferred network" of hospitals where the co-pay may be lower (or zero), while treatments at non-network hospitals may attract a higher co-pay percentage. Always check the network hospital list of your insurer before choosing a hospital for treatment. Some policies offer a "co-pay waiver" benefit that can be purchased as an add-on. For example, paying an extra premium of ₹2,000 to ₹5,000 per year might waive the 20% co-pay for treatments at network hospitals. This is particularly valuable for senior citizen policies where co-pay is typically mandatory. When choosing between health insurance policies with and without co-payment, compare the premium savings over the expected policy lifetime against the potential co-payment costs. A policy without co-pay might have a ₹5,000 higher annual premium than one with 20% co-pay. If you are young and healthy and rarely hospitalized, the co-pay policy saves you ₹5,000 per year. But a single hospitalization with a ₹4 lakh bill at 20% co-pay costs you ₹80,000 — which exceeds many years of premium savings.