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Should you opt for co pay in your health insurance plan

Health Insurance

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Health insurance is a critical financial need in this age of ever increasing healthcare expenses. However, as cost of healthcare and the accessibility to better and more expensive hospital facilities in India is increasing, the cost of health insurance is also increasing. To reduce the amount of health insurance or Mediclaim premium, insurance buyers can opt for the co-pay option. Many health insurance companies have now introduced the co-pay option in their Mediclaim policies. Co-pay option is becoming increasingly common in group health insurance plan. Many individual Mediclaim plans also now have co-pay options. We will discuss about co-payment impacts your Mediclaim costs and your healthcare choices.

What is co-pay?

In a co-pay option the insured agrees to pay a percentage of the health insurance claim. The percentage of co-pay is in the range of 10 – 25%. The insured must first pay his or her share of the claim and then the insurance company settles the balance amount up to the limit specified in the sum insured of the Mediclaim policy. For example, if you have 20% co-pay option in your Mediclaim policy and your claim is Rs 1 lac, then you have to pay Rs 20,000 and the insurance company will pay the balance Rs 80,000 provided your sum insured is Rs 1 lac or more. Let us take another example. If your sum insured is Rs 1 lac with 20% co-pay option and your claim is Rs 1.5 lac, then you have to pay Rs 70,000 while the insurance company will pay Rs 80,000.

What is the benefit of co-pay?

If you opt for co-pay, then your Mediclaim premium will be lower. For example, if you opt for 20% co-pay, then your Mediclaim premium can be lower by up to 20%. So the insured stands to gain by opting for co-pay if there is no hospitalization in the policy term. However, if there is a hospitalization then the insured has to pay his or her co-pay amount, thereby incurring higher expenses.

Different co-payment policies

Different insurers have different co-payment policies. We will discuss some of the policies below:-

  • Class of service:

    Some insurers charge higher co-pay if the insured avails a higher class of service. For example, if the insured opts for a deluxe suite, then he or she may have to pay higher co-pay charges. The insured must bear this mind when selecting the class of service, if his or her Mediclaim policy stipulates such a clause.

  • Hospitalization in metro cities:

    Hospitalization costs in metropolitan cities are much higher. Some Mediclaim policies do not require any co-pay if the hospitalization is in a non-metro city. But if the insured undergoes hospitalization in a metro city, then they may have to co-pay a portion of the claim.

  • Treatment in a non-network hospital:

    Some Mediclaim policies may require co-pay if the insured undergoes treatment in a non network hospital. The insured should confirm this, while selecting a hospital. The network of empanelled hospitals can change any time, even during the policy term of the insured. Therefore, it is advisable to call the health insurance company before hospitalization to confirm whether a particular hospital is empanelled with the insurer.

  • Treatment in a certain category of hospital:

    Some insurance companies label certain hospitals as expensive. Treatment in such hospitals may require higher co-payment depending on the clause in the Mediclaim policy. The insured should confirm this by calling the health insurance company before making a decision.

  • Pre-existing medical conditions:

    In most Mediclaim policies pre-existing medical conditions are excluded from the cover for the first 3 years or so. Thereafter the insured can claim for treatment of pre-existing conditions, but such treatments may require co-payment from the insured.

Should you opt for co-pay?

  • If you are covered under your company’s group health insurance plan, you may not have an option. You will be bound by the co-payment contract between your company and the health insurer. Some companies do not require co-pay if the employee is hospitalized, but require co-pay if their parents are hospitalized. In such cases, depending on specific health related risks of your parents, you may want to buy separate Mediclaim for your parents or even a family floater policy. You have to see the trade off between the co-payment for specific health issues and the cost of premium of a separate plan, to make an informed decision

  • If you are young and healthy with no medical conditions, you should opt for co-pay because you will save on the cost of Mediclaim premiums. Over a period of time, this cost saving can be quite substantial.

  • If you are a senior citizen with known medical conditions, you should not opt for co-pay. The cost of hospitalization for a serious illness can be quite huge, and the co-payment amount will also be quite substantial.


Co-payment can help you reduce your health insurance costs. You should weigh the pros and cons when buying a Mediclaim policy with co-payment clause. There is standard format for co-payment clause in your Mediclaim policy document. Therefore, you should read the policy document very carefully to understand the different provisions of the co-payment clause.

(Insurance is the subject matter of the solicitation. For more details on the risk factors, term and conditions please read sales brochure of the respective companies carefully before concluding the sale and/or contact an IRDA Licensed Insurance Advisor/ Insurance Broker)

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Dwaipayan Bose

An alumnus of IIM Ahmedabad, Dwaipayan is a Finance and Consulting professional, with 13 years of management experience, mostly in MNCs like American Express and Ameriprise Financial, both in India and the US. In his last role, he was the Chief Financial Officer of American Express Global Business Services in India. His key interests are building best in class organizations, corporate governance and talent development

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