When it comes to availing health insurance, you should be clear on certain terms, which might often be confusing.
Particularly, when it comes to terms like copay, deductible and coinsurance, someone without proper information can become befuddled pretty fast.
Don’t worry, we have got you covered!
Here, we will explain all about coinsurance, deductible and copay meaning, and their implications on a health insurance policy.
Let’s take a look!
What Does Copay in Health Insurance Mean?
Copay refers to when policyholders have to bear a fixed part of their expenses towards medical treatment while the rest is borne by the insurer. This can either be as a fixed amount or a fixed percentage of the treatment costs.
For example, if your insurance policy comes with a copay clause of Rs. 2000 of your treatment expenses and the treatment costs you Rs. 10,000, you will be required to pay Rs. 2000 towards your treatment, while the rest of Rs. 8000 will be covered by the insurer.
Again, if the copay clause requires you to cover 10% of the total cost incurred, you will be required to pay Rs. 1000 towards it, while the rest 90% (Rs. 9000) will be paid by the insurer.
The features of copayment under insurance policies can be listed as follows:
- With the copay clause, insurance providers bear the majority of the claim while the policyholder is required to cover a certain fixed part.
- The copay amount is fixed according to the medical service availed.
- A lower copayment amount means higher premium payment.
- These clauses are levied mostly on health insurance policies for senior citizens.
- These are more popular in metropolitan cities where the cost of treatment is higher.
No copayment means that the entire sum of treatment expense incurred is borne by the insurance provider.
Digit Insurance provides health insurance policies with 0% copayment and covers the entire treatment costs incurred by an individual.
What do Deductibles Mean?
Deductibles is a fixed sum of money that policyholders are required to pay before their insurance policy starts contributing to their medical treatment. The term for paying deductibles is decided by the insurance provider - whether it is per year or per treatment.
For example, if your policy mandates a deductible of Rs. 5000, you will be required to pay for your treatment expenditures amounting up to Rs. 5000, after which your insurance policy will kick in.
Following are some of the features of deductibles:
- It is levied to help insurance companies guard their interest against regular and unnecessary claims.
- It helps reduce premium payments towards insurance policies.
- It might raise the total cost that an individual incurs towards their medical treatment.
What does Coinsurance Mean?
Coinsurance refers to the percentage of treatment costs that you have to bear after paying the deductibles. This amount is generally offered as a fixed percentage. It is similar to the copayment provision under health insurance.
For example, if your coinsurance is 20%, then you will be liable to bear 20% of the treatment cost while the rest 80% will be borne by your insurance provider.
That is, if your expenses towards treating a certain disease are Rs. 10,000, you will be required to pay Rs. 2000 while Rs. 8000 will be covered by your insurance policy. This amount is generally calculated after you have paid your deductibles.
Following are a few features of coinsurance plans:
- It helps to protect insurers against large claims.
- Policyholders are required to pay their deductible amount before their coinsurance plan comes into play.
- The percentage of coinsurance remains fixed.
- This percentage adheres to the out-of-pocket maximum that you can pay for a year before your insurance policy pays the rest of it.