Difference Between Copay, Coinsurance & Deductible
Sibasish wants to purchase a health insurance policy as he got a new job in an established MNC. Sibasish wants to protect his future against the rising costs of healthcare inflation and various diseases. Since Sibasish is a novice customer, he doesn’t have much information regarding various terms (Copay, Coinsurance, deductibles, etc.) associated with health insurance plans.
In this article, we are going to discuss more information about copay, deductible, and coinsurance meaning and their importance in a health insurance policy. This will help people like Sibasish in taking a firm decision towards their policy purchase.
What is Copay in Health Insurance?
Copay indicates a fixed amount that a policyholder needs to pay for his healthcare expenses towards medical treatment. The remaining part is paid by the insurer. This part can be a fixed amount or a fixed percentage of your medical treatment costs.
If your purchased policy comes up with a copay clause of Rs. 2000 of your treatment expenses and your treatment cost is Rs. 10,000, then you need to pay Rs. 2000 for your treatment. The rest amount (Rs. 8000) will be paid by the insurance company.
Again, if the copay clause comes up with 10% of the total cost of your treatment, then you need to pay Rs. 1000 for your medical expenses. The remaining Rs. 9000 will be reimbursed by the insurance provider.
Some intriguing features of the copay clause are:
- With this type of cost, the majority of the expenses are used to bear by the insurance company. The policyholder only pays a certain fixed part of the treatment cost
- The copay amount is fixed
- Your premium will be higher if your copayment amount is lower
- This clause is mostly included in health insurance policies for senior citizens
- This clause is more common in metropolitan cities where the cost of treatment is expensive
- No copayment indicates the entire cost of the treatment will be covered by the insurance provider
What are Deductibles?
Deductibles are the fixed amount that a policyholder needs to pay before raising the claims to the insurance company for his medical treatment. The term for paying deductibles (either per year or per treatment) is decided by the insurer.
If your health insurance policy comes up with a deductible of Rs. 5000, then you need to pay Rs. 5000 for your healthcare expenses before your insurance company enters the picture.
Some of the features of deductibles are:
- It prevents policyholders from raising false and minor claims
- This clause reduces your premium amount
- This might enhance your total medical expenses
What is Coinsurance in Health Insurance?
The coinsurance definition refers to the percentage of treatment costs that a policyholder needs to reimburse after paying deductibles. This is generally a fixed percentage.
If your health policy comes up with a 20% coinsurance clause, then you need to bear 20% of the treatment cost while the rest 80% will be offered by the insurance company.
If your treatment cost is Rs. 10,000 and the coinsurance clause is 20% of the expenses cost, then you need to pay Rs. 2000 while Rs. 8000 will be provided by your insurer. Once you pay your deductibles, this amount is calculated.
Some interesting features of coinsurance are:
- This safeguard insurance companies against big claims
- After paying the deductible amount, a policyholder needs to pay his coinsurance amount
- The percentage of coinsurance remains fixed
Let’s take a quick look at Coinsurance vs Copay
|
Coinsurance |
Copay |
| According to the coinsurance plan, the percentage of expenses that you need to pay for your treatment is fixed |
This is a pre-decided fixed part that you need to pay for your healthcare expenses. It can either be a fixed amount or a fixed percentage of the treatment costs |
|
After paying the deductibles, you need to pay your coinsurance part |
You need to pay a certain portion of payments each time you need healthcare service |
| This amount is billed by your health insurer, and you need to pay the amount directly to the company |
You need to pay the expenses at the time of your treatment |
|
You need to bear coinsurance after meeting deductibles |
Under certain circumstances, copay counts towards deductibles |
Having understood the difference between copay and coinsurance, now, consider Deductible vs Copay
|
Deductible |
copay |
| This is a fixed amount that a policyholder needs to pay before his insurance policies start contributing towards the medical bill |
Copay is the fixed amount or a fixed percentage that policyholders have to pay towards their treatment expenses, but the rest amount is paid by the insurance company |
|
You need to pay a lesser premium if your deductibles are higher |
Your premium will be lesser if your copay amount is large |
| A deductible is considered before the insurance policy pays an individual’s treatment expenses |
The copay clause is removed only for some specific healthcare services |
The Conclusion
If you purchase a health insurance policy with cost-sharing terms, your premium amount will decrease. But your liability towards the policy will enhance. You need to pay a part of your healthcare expenses every time, even in the case of an emergency. It can be an uphill task for you if you don’t have readily available cash.
It will be useful if you purchase a policy that doesn’t come up with such cost-sharing terms. Nowadays, many Indian health insurers are offering plenty of policies that will effectively suit all your requirements. Check all the terms and conditions before plunging into a health insurance plan so that you can enjoy all the benefits of the policy.
