What is a copay (copayment) in health insurance


13 Apr 2023

Understanding Copay Provisions in Health Insurance Policies

The term "copayment" in the context of health insurance refers to the part of the claim amount that the policyholder is expected to cover out of pocket, with the insurance company covering the balance. There are various insurance companies that offer health insurance plans, some of which have copayment requirements while others allow for a voluntary copayment. 

Health insurance policies with copayment provisions tend to be more affordable since they lessen the insurer's responsibility by splitting losses between the insured and the insurer. 

How does copay in health insurance work?

An insured person has two options for submitting a claim: reimbursement of expenditures or cashless submission. In the event that a patient files a claim and chooses to receive cashless medical treatment, the health insurance provider pays the hospital where the patient or a member of their family is getting treatment directly. On the other hand, when a reimbursement claim is made, the health insurance provider pays the insured for the costs spent while they are receiving treatment. In both cases, the copayment done by the insurance company is a pre-specified part of the total bills, and the remaining copayment is done by the policyholder. 

Types of copay clauses in health insurance

There aren't always copay criteria in health insurance programs. But, in the event that your health insurance policy has this provision, it may be used in different ways in different health insurance types.




On medical bills

In this category, whether the copay is optional or required, it applies to all claims made. As a result, you will be responsible for paying a share of the claim amount raised.

For hospitalisation in metro cities

Insurance companies may impose a copay clause in such situations since treatment expenses in urban areas are greater than those in smaller cities and villages.

Senior citizen policies

These are the insurances having the majority of copay requirements. It is mostly due to the fact that older patients typically have substantially greater treatment costs.

For treatment & reimbursement claims at any non-network hospital

Insurance companies occasionally only impose the copayment requirement on reimbursement claims or for medical care received at hospitals outside of their network. In this situation, insurance companies are responsible for paying out cashless claims.

 These are the health insurance types, along with their copayment provisions. 

Features of copay health insurance policies

You must first be familiar with the features of a health insurance plan with a copay. Following is a list of its features:

  • With this method, the insurance company pays for the majority of your claim while you are responsible for a portion of the associated costs.

  • The copay percentage varies depending on the type of medical care you get.

  • You will be required to pay more premiums for your health insurance if you choose a lower copay amount.

  • Most senior citizen health insurance plans include copay restrictions. 

Should you choose a copay policy?

Make an informed decision by being familiar with the benefits and drawbacks of choosing copay in different health insurance types

Benefits of a copay - The fact that copays allow policyholders to pay a lower overall premium is its most prominent benefit. Copays are advantageous for people who desire reduced premiums, even if they might have to pay a percentage of the medical costs in the event of a claim. 

Disadvantages of a copay - The copay in health insurance has several drawbacks, even if it lowers the policy's rates. The most notable of these is the possibility of the policyholder having to pay a sizable quantity of money out of pocket in the event of a medical emergency if the claim amount is too high. 

What impact does copay have on insurance rates - A copay policy is correlated with the cost of the premiums. This implies that choosing a higher copay would lower your total insurance costs, but you will be required to pay a larger sum of money when filing a claim. On the other hand, choosing a higher copay in health insurance will result in a higher insurance premium, but it will result in a smaller out-of-pocket expense.  

When purchasing a health insurance plan, copayment (copay) is one of the most crucial factors to consider. You can now wisely choose to use copays and optional deductibles, as you have a basic grasp of what they are and how they work.

Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.