Term of the week: Co-payment


In most general insurance policies, particularly health insurance, there is a co-pay clause, wherein, as a policyholder, you would have to pay a part of the expenses, while the rest will be covered by your insurer.

The co-payment amount varies with the type of coverage under a policy. For instance, insurance companies often have a co-pay of 10 per cent on doctor visits or prescription drugs.

So, if your total expenditure is ₹10,000, you will have to pay ₹1,000; the rest will be borne by the insurance company. The co-payment clause in a health policy is to discourage people from making unnecessary claims.

Note that, co-payment is not to be confused with deductible. While co-payment is an amount you pay each time you get a healthcare service, you pay deductible each year before your health insurance kicks in.

For instance, if in a health insurance policy, you have a deductible of ₹500 for doctor visits and your doctor fee works out to ₹400, the entire expenses should be borne by you since you have not reached the deductible limit.

If you pay ₹100 for another doctor visit and, the same year, you happen to have a health incident that costed you ₹1,000, then this amount will be borne entirely by the insurance company as you have paid the deductible.

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