Copayment 101 : Understanding copay in medical billing

When was the last time you clicked on “Terms and Conditions” before hitting the “Next” button on a website? Chances are, you won’t do it next time either. Not only are legal documents boring to read, but they are also riddled with technical words that seem to be from a different reality altogether. So much so that people have dubbed the entire language “legalese”. 

Similarly, health insurance has fine print and clauses in it which won’t make sense to you, no matter how many times you read them. Yet your understanding of these clauses can make or break a good insurance deal. Before you buy an insurance it is essential you understand what copayment in insurance means and whether or not you can avoid it.

What is Copayment in Health Insurance?

When you agree to copay in medical billing, you as a policyholder agree to cover some amount of medical expenses from your pocket while the insurance company will pay the rest (most) of it. Common arrangements for copayment during claim settlement include 90-10, 80-20 and 70-30 percent. Let's say you agree to copay 10% on sum insured. If you go on to claim 1 lakh rupees for medical expenses in future, you would pay 10k from your pocket while the insurance company will cover the rest 90k.

When are you ineligible to opt out of co-payment

Copayment can be made a part of your insurance deal either voluntarily or mandatorily. When it is mandatory, you cannot avoid bearing some expenses from your side when a claim is made. The reason for making it mandatory in some insurance policies is their high-risk nature. When an elderly or sick person is insured, the possibility of claims being made is already high. Hence, copayment in such cases is often mandatory.

Hassle of Hospitals

Apart from the high-risk cases listed above, avoiding copayment is a balancing act. It is an inconvenience that can pop up right as you go to make a claim. So to avoid any unwelcome surprises there are two more things you should always consider. What hospital you go to and where this hospital is located.

a) Choose Network Hospital

Many insurance companies impose a co-payment condition only if the policyholder gets his treatment in a non-network hospital. To avoid all bills, pick a hospital that is networked with your insurance company. Insurance companies that provide better options in network hospitals are preferred by policy buyers.

b) Zonal Copayment in Health Insurance

Copayment can be made a part of health insurance based on where you live. Healthcare in metropolitan cities costs more, so it is very likely you will have to copay to receive medical treatment in cities like Mumbai or Delhi. 

For this purpose insurance companies offer zone based health insurance in which they divide the country into three major zones. Further, the cities can be classified into tiers. The metric for this division? Population. Zone 1 includes all densely populated metro cities in India. This means that premiums in zone 1 are more expensive and almost always require a co-payment.

Voluntary Copay and Its Infinite Paradox

In what world would a person willingly decide to pay a handsome chunk of bills when they don’t have to? In a lower-middle income world. Insurance premiums are expensive and not everyone can afford to pay huge sums of money for an event that will probably happen. 

Opting for copay can substantially bring down premium rates making it affordable for lower-middle income class in the country. But there's a catch, copay is financially beneficial only until a claim is made. When you find yourself in a medical emergency, the money you saved on health insurance premiums will ironically be spent on medical bills. Touché, universe.

Can't Afford to Avoid it? Dial it.

Above stated woes of the common man must have made you question if or not copay is the way to go. The answer lies in the good old saying, something is better than nothing. If high premiums have upended your plans to get health insurance, it's best you settle and share the risk with the insurer. Fine tune it to just the right number so you can afford the plan and keep the copay percentage low.

Reimbursement in Copay

I repeat, choose a network hospital. Let's say you chose a plan with 10% copay. In case of a medical emergency you will need to figure out how the bill is paid at the hospital. Time is of essence. If you choose a network hospital you can simply pay the 10% of the bill while the insurance company takes care of the rest of it. 

However, if the hospital in which the patient is being treated is a non-network hospital you would have to pay the entire amount out of pocket initially. This final amount minus 10% will be later reimbursed to you by the insurance company once you successfully file a claim. Some minor non payable expenses will also not make it back into your bank.

The copay percentage will remain unaffected on top-up or renewal of your policy unless you intend to change it.

Companies with mandatory co-payment in insurance

As you probably understand by now, insurance companies have made copayments mandatory to share healthcare costs between the insurer and the insured. It will help reduce your premium and prevent overuse of insurer's services. Following are some healthcare plans with mandatory copayment offered by top insurance companies:

> Care Heart

> Care Freedom

> Star Senior Red Carpet

> ICICI Golden Shield

To find how much you can save on their premiums Click Here.