Health insurance is a must-have as it offers compensation for you and your family for any hospitalization expenses. However, there are many terms used in health insurance that are confusing. Buying a health insurance policy without clearly understanding the terms may result in you buying a health plan unsuitable for your family. One of the most commonly confused terms in health insurance is Copay vs Deductible.
Let us understand the differences between a co-pay and a deductible.
Co-payment (Co-insurance)
Co-payment or Co-pay as it is popularly known is a pre-defined percentage of the medical claim that has to be paid by the insured. In India, the term Co-pay and Co-insurance are used interchangeably. Whenever you get hospitalized, you have to bear the mentioned percentage of expenses out of your pocket.
For example, assume that you have a health policy with a co-pay of 20%. If at all you get hospitalized and the total reimbursable claim comes to Rs.1 lakh, then you have to pay Rs.20,000 from your pocket and the rest will be paid by your insurer.
This rule will apply to every claim for hospitalization done on this policy.
Know all about the Common Exclusions in Health Insurance
Deductible
A deductible is a fixed sum of money that you as a policyholder are required to pay in a given policy year before your health insurance starts providing the cover.
For example, assume that you have a health policy of Rs.5 lakhs Sum Insured with a deductible of Rs.1 lakh with the policy year from Apr 2020 – March 2021.
Case 1: You get hospitalized and incur a bill of Rs.1,20,000 in Aug 2020.
Since the deductible is Rs.1 lakh, you have to pay this to the hospital and Rs.20,000 will be borne by the insurer.
Case 2: You get hospitalized and incur a bill of Rs.50,000 in Aug 2020, and in Dec 2020 a family member gets hospitalized and incurs a bill of Rs.1.25 lakh.
Since the deductible is Rs.1 lakh, you have to pay the entire bill of Rs.50,000 incurred in Aug 2020. For the hospitalization in Dec 2020, you have to pay a bill of Rs.50,000 and the remaining Rs.75,000 will be borne by your insurer.
| Co-Pay | Deductible |
| Pre-defined percentage of the medical claim that has to be paid by the insured. | A fixed sum of money that a policyholder is required to pay in a given policy year before the health insurance starts providing the cover. |
| Co-pay can be made applicable for only certain members of the family such as senior citizens, parents, etc. | A deductible is applied for all the insured people under a policy. |
Also know the Difference between Sum Assured and Sum Insured