Co-payment vs Deductible

Co-payment and Deductible differ in when & how much you have to pay and what's left over for your health policy to pay.

A co-payment is a pre-defined amount which the policyholder has to pay each time he or she gets a particular type of health care service. It is that portion of the claim which the insured agrees to bear in the event of a claim. The balance is to be paid by the insurance company. For example, if a person agrees to a co-pay of 10% and the approved claim is Rs 1 Lakh then he will need to shell out Rs 10,000. The rest 90% will be paid by the insurer.

A deductible is a fixed amount of money that the policyholder has to pay each year before his or her health insurance kicks in completely. On paying off the deductible, the health plan begins to pick up its share of the health care bills. Higher deductibles will lead to lower premiums and vice versa. It can also be called as out of pocket expense. For example, a person has a deductible of Rs 1,20,000. He gets the flu in January and sees a doctor. The doctor's bill is Rs 12,000. Since he has not paid his deductible this year, he will pay the entire bill. After paying the doctor's fees, he is left with Rs 1,08,000 to go on his yearly deductible. In March, he breaks his arm in an accident. Now the doctor's fee comes out to be Rs 1,80,000. In this situation, he will pay Rs 1,08,000 of this bill and the rest will be paid by his insurer. In April, he gets his cast removed. The bill comes out to be Rs 30,000. He doesn't have to pay any more since he has met his deductible for this year. His insurer will pay the full share of the bill.

So, the difference between a co-payment and a deductible is that a deductible is on once-yearly thing. Once the policyholder has met his deductible for the year, he doesn't have to pay any further deductible until the next year. A co-payment is an on-going process. The policyholder keeps paying co-payments each time when he gets a health care service.