Health insurance is undoubtedly vital in today’s day and age. With rising instances of medical conditions, it has become imperative to have a safety net in the form of a health insurance plan. But when comparing the various policies, you might come across terminologies that might leave you bewildered. While there are different terms that you should know before finalising your purchase, this article explains the differences between two of such key terms – deductible and copayment.
While prima facie these terms may seem more or less similar in meaning, they have a significant difference among themselves. They differ in how much you, the insured, need to pay and what remains for your insurer to pay.
A copayment is the final admissible claim amount paid on a sharing basis by the insurer and the insured. To simplify, a definite amount in your health insurance that you need to pay when treatment is availed. Under the copayment clause, you, the insured, agree to bear a fixed percentage of the claim and your insurer pays the balance. This fixed percentage can differ between the various insurance plans as per their terms & conditions and also among the insurance companies. Let us understand it using an example of Mr Laxman.
Mr Laxman buys a health insurance policy with a sum insured of ₹5 lakhs. This policy has a copayment clause of 10%. Now each time Mr Laxman makes a claim, he shall be required to pay 10% of the admissible claim amount.
On the other hand, the deductible element of your policy differs from a copayment clause. A deductible is a predefined amount that you need to pay while claiming the health insurance plan. To further simplify, it is the amount that you need to pay before the policy coverage kicks in. This deductible can be either in terms of an amount or a percentage, again, varying according to the specifications of your chosen plan. Also, deductibles can be used to influence your premium too. The higher the deductible, the lower is your premium and vice versa.
For example, you purchase health insurance for senior citizens with a deductible element of ₹1,50,000. Now when you avail a treatment, the insurance coverage will not kick in until your medical bill crosses ₹1,50,000. This can be in aggregate of multiple treatments availed under your insurance cover.
Thus the key difference between copayment and deductible is latter being once every policy-year. Once you have paid the deductible for the policy tenure, you need not pay again. Copayment, on the other hand, is an ongoing process. You are required to pay at each claim settlement.
When choosing the different plans, make sure you use a health insurance premium calculator. It not only aids the process of selection, but also helps in comparing the various available plans. You can make a suitable choice depending on your and your family’s health requirements.
Now that you are aware of the differences between critical terms like copayment and deductible, select an adequate plan that checks all your needs and ensures optimal coverage from the health insurance policy.