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Co-Payment in health insurance is a system where the policyholder needs to pay a part of the total medical expenses and the rest of the amount needs to be paid by the insurance service provider. The co-payment amount gets calculated on the basis of terms and conditions of the policy that’s opted for.
In a regular insurance policy, when it’s time to file a claim, you go to the hospital, get your medical bills and your insurance company takes care of it. However, with a co-pay clause, you agree to pay a part of your medical bills along with your insurance provider. There are various health insurance companies in the UAE that offer a co-pay clause in insurance policies. The co-pay amount is usually fixed based on the services, drugs, and nature of medication required.
For example, if you have a co-pay clause of 10% in your insurance policy and your medical bills are for AED 10000, you need to pay AED 1000 out of your own pocket and get the rest of the amount which is AED 9000, paid by your health insurance company.
Here is how you can get the co-pay clause applied to your policy.
So based on these two types of claims, there are two options that can be chosen with a co-pay.
Now that you know what co-pay is in a health insurance policy, let us check out the types of co-pay clauses that can be applied to different types of insurance policies.
Before we go ahead, let us keep in mind that not all insurance providers come with mandatory co-pay clauses in their policies. However, if they have this clause, this is how you need to settle your payments.
Let us now go through the features of the co-payment clause in a health insurance policy to know more about how it works.
Here are some advantages of adding a co-pay clause to an insurance policy:
Here are the disadvantages of adding a co-pay clause to health insurance policies.
Now that you know almost everything about the co-payment clause in health insurance policies, let us go ahead and check how is it different from co-insurance.
People usually confuse co-payment with co-insurance. These two are completely different things and the major difference is that under co-insurance clause both the insurer and the insured person enter into an agreement where they decide the percentage each party needs to pay to settle the total bill.
On the other hand, in co-pay, the contribution percentage is fixed based on different healthcare services and the nature of treatment the policyholder avails.
In some policies when the policyholder needs to report a claim to get their medical expenses paid by their health insurance company, they need to pay a fixed amount first. This fixed amount is called the deductible. In simple words, the insurance company will pay the remaining amount of medical bills only when the deductible amount has been paid by the insured person.
On the other hand, co-pay is an amount based on the percentage the insured person agrees to when buying the policy. The policyholder pays the said percentage of while the remaining bill is settled by the insurer.
Here are a few pointers to understand the importance of co-pay in a health insurance policy:
Frequently Asked Questions
Q1. What is co-pay in health insurance?
Ans: Co-pay in health insurance is a percentage that is borne by the insured person when the time comes to paying medical bills. Let’s say you have a co-pay clause in your insurance policy and you have an agreement for making 10% co-payment out of your own pocket. In case of a medical emergency, your hospital bill amounts to AED 45000. In this case, you need to pay only 10% of the total amount, i.e., AED 4500. Rest is paid by the insurer.
Q2. How does co-payment in a Health insurance policy work?
Ans: Co-pay is a fixed percentage of the claim amount that the policyholder needs to bear from the total amount. The bigger share of your expenses is paid by the insurance provider. You can get more information about co-pay percentage and payments from the TPA team of the hospital.
Q3. Who gets the co-pay money?
Ans: The insured person needs to pay the co-pay amount to the hospital.
Q4. Does co-pay Impact Health Insurance Premium?
Ans: Yes, if the co-pay percentage is higher the amount of your insurance premium will be lower. However, if the co-pay percentage in the policy is lower, you need to pay a higher premium amount.
Q5. Why do insurance companies offer co-pay clauses in their policies?
Ans: There are various reasons why insurance companies offer co-pay clauses in the policies.
Q6. Why are health insurance policies with co-pay cheaper?
Ans: The health insurance policy with the co-pay clause is cheaper as you need to pay only the premium for the sum assured remaining after the deduction of the fixed co-payment percentage. This way the risk and liability get divided between the insured person and the insurer so the policy becomes cheaper.
Q7. Should I take a policy with co-pay?
Ans: The decision of whether to add or not the co-pay clause in your health insurance policy depends upon your present physical state and medical condition. If you are physically fit and maintain a healthy lifestyle with regular exercise, you may not need to use your insurance policy anytime soon. Then you must take the insurance plan with a co-pay clause. This will help you lower your premium amount.
On the other hand, if you find yourself unfit and have a vulnerability to medical conditions, it is advisable to take a regular health insurance policy.