In health insurance, co-payment is a fixed percentage of the claim amount that needs to be paid by the insured. This percentage is decided at the time of policy purchase, so you check the policy documents to know about any applicable co-payment before buying.
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Co-payment is the percentage of the claim that the insured agrees to pay from his/her pocket irrespective of the claim amount. It usually varies from 10% to 30% and is insisted mostly under senior citizen health insurance policies. The insurer only pays the balance claim amount.
For example, suppose Mr. Mahesh Lamba’s health insurance policy comes with a co-pay of 20% on all claims. He files a claim of Rs 2 lakh. Take a look at the following table to understand how co-payment will work for different sum insured:
Policy Sum Insured |
Claim Amount |
Co-Payment |
Payable Amount |
Remaining Out of Pocket |
Rs 1 Lakh |
Rs 2 Lakh |
20% of Rs 2 Lakh= Rs 40,000 |
Rs 1 Lakh |
Rs 60,000 |
Rs 2 Lakh |
Rs 2 Lakh |
20% of Rs 2 Lakh= Rs 40,000 |
Rs 1.6 Lakh |
NIL |
Rs 5 Lakh |
Rs 2 Lakh |
20% of Rs 2 Lakh = Rs 40,000 |
Rs 1.6 Lakh |
NIL |
The major difference between co-payment and deductible is that the co-pay is a percentage of the claim amount whereas the deductible is a fixed amount to be paid by the insured for each claim. While the co-pay percentage is specified in the insurance policy, the deductible amount is calculated on a yearly basis. Both these costs must be paid before the insurance coverage kicks in during a claim.
Another difference between co-pay and deductible is that the co-payment may be applicable to specific covers or services. For eg., co-pay may be applied to diseases with high treatment costs or going outside the insurer’s network of hospitals to avail treatment. On the other hand, deductibles apply to the overall cost of medical care.
The co-payment under a health insurance policy gets activated as soon as you raise a claim. When a claim is raised, you are required to pay the co-payment amount and the remaining claim amount is paid by the insurance company. Unless you pay the co-payment, your insurance company will not pay the remaining claim amount.
The reason why you must opt for a health insurance policy with a co-pay clause is given below:
Not every health insurance company adds a co-pay clause to their health plans. This is because co-payment clauses come with a few disadvantages. Take a look at them below:
If the co-pay amount is high, then it may prevent the policyholder from seeking medical care for life-threatening conditions. Thus, the health policy becomes of no use. If an individual needs to pay a substantial amount from his/her pocket as co-payment then the whole purpose of buying health insurance is crushed.
The whole agenda of buying health insurance is to reduce out-of-pocket expenses. If the insured cannot get the required financial aid from the health insurance provider at the time of need, then the objective of buying a health plan with a co-payment is not served.
Health insurance plans with co-pay are usually not a preferable choice among people. Anyone who needs medical coverage would choose a policy without a co-pay clause. An insurance company that provides extensive health cover will be more beneficial for the customer and will witness more sales.
Choosing a policy with higher co-pay means a lesser premium. But it also means that the insured can only benefit from it until he/she files the claim under the health plan. In case of a medical emergency, the amount saved on the premium will get used towards the overall cost of the treatment anyway.
The answer to this question depends on your health condition. So before you buy a health plan with a co-payment clause, you should consider your medical history and current medical state. Healthy individuals with major health issues who follow a healthy lifestyle, diet and exercise regularly have lower chances of raising a claim under their health insurance policy. Hence, buying a health plan with co-payment will be beneficial for them.
On the other hand, if you have a sedentary lifestyle or are aged, then you are more susceptible to health-related issues. You might feel the need to file a claim under your health insurance policy at some point. Therefore, opting for a regular health insurance plan with no co-pay is the best for you.
Co-payment is one of the most important things to consider at the time of buying a health insurance policy. Now that you have a basic understanding of co-pay and voluntary deductibles, you can decide if you want to opt for them or not. You will now be able to make an informed decision of buying a health insurance plan with co-pay.
Disclaimer: *Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer