Co-Payment and Deductible
Updated On Dec 05, 2020
There are certain features of health insurance plans that can be confusing. You must know these features to understand your health plan better. It enables you to understand how much you have to pay when you have to pay, and what’s leftover that your health policy pays. Two such features are co-payment and deductible. These both are fixed costs and don’t vary based on how much health care service costs. Let’s have a closer look
What is co-payment?
Copayment or copay is the fixed amount that the policyholder has to pay for getting a particular healthcare service, and their insurance provider covers the remaining amount.
For example, Mr. A has a health insurance plan with a copayment of Rs. 200 for a primary care physician’s visit, Rs. 400 for visiting a specialist, and Rs. 100 for filling the prescription. Now, if a visit to an orthopedist costs Rs. 500. Mr A will pay Rs. 400 for that visit and the insurance company pays the rest Rs. 100. If Mr A goes for a second visit to his orthopedist, again he pays Rs. 400 and the insurance company pays the rest Rs. 100 for the second visit. Thus, it is an ongoing process. For every visit, you have to pay your share of co-payment, and after it gets exhausted, the remaining amount is paid by your insurance provider.
What is deductible?
A deductible is a fixed amount that the policyholder pays during a specified period, usually a year. After the completion of the deductible amount during that period, the health insurance provider begins to cover the medical costs. It is to be paid every year. The amount is non-refundable, even if there is no claim for a particular year. Premiums will be lower for higher deductibles and vice versa. Also, deductibles for family coverage and individual coverage are different.
For example, Mr. A has a health insurance plan with a deductible of Rs. 5000 for a year. In January, Mr. A has a knee sprain, and the treatment cost comes to around Rs. 2000. Mr. A pays this as he has yet to meet his deductible. In May, he gets the flu, and the hospital bill comes to Rs. 2000. Again, he pays the full for the treatment. In September, he has treatment for his neck problem, costing Rs. 3000. Now, on this bill, Mr. A pays Rs. 1000. As the deductible for that year is met, the insurance company pays Rs. 2000 for the rest of the treatment.
Co-payment vs Deductible:
|
Co-payment |
Deductible |
|
|
1. |
Payment on every visit |
Payment on a yearly basis |
|
2. |
Ongoing process |
Once deductibles are met, no payment until the next year |
|
3. |
Generally, lower premiums, but differ from provider-to-provider |
Lower premiums for higher deductibles |
|
4. |
Apply for preventative checkups, routine health services, etc. |
Apply for surgical procedures, blood tests, diagnostic studies, the implant of medical devices such as pacemaker, hospitalisation, etc. |
Thus, both co-payment and deductible are types of cost-sharing techniques followed by insurance companies. It is the way the insurance companies split the health care cost with the policyholder. Now that you have an understanding of these features shop for the best health insurance without fear of being confused in the nitty-gritty of the health insurance terms.
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