Co-payment and Deductible-Know the difference!
Published On Mar 29, 2019 5:30 AM By Sakshi Aggarwal
When surfing for the best health insurance for yourself and your family, some research is required from your end. Here you have to gain clarity on how much you are required to pay towards the cost of your health expenses, when to pay, and how much of the treatment cost will be paid by your health insurance policy. In the same regard, being aware of various health insurance terms will not only help in your decision making but also save you from not purchasing a plan that you actually don’t require.
To start with let’s understand the commonly used health insurance terms, which may sometimes leave you muddled up. These are co-payment and deductible. Both the terms sound similar but are different from each other. Let us see how.
What is a health insurance deductible?
A deductible is a fixed amount that a policyholder pays every year before his/her health insurance kicks in fully. It is a pre-defined amount paid by the policyholder at the time of purchasing the policy. It can be in the form of a fixed sum or percentage paid to the insurer. Once the policyholder pays this deductible, his/her health plan will start picking up its share of health care bills.
For example, if Mr. Dixit has a deductible of Rs. 1,20,000. He catches flu in January and seeing the doctor costs him Rs. 12,000. Because he didn’t pay the deductible this year, he will have to pay the entire bill. After paying the doctor’s bills, he will be left with Rs. 1,08,000 to go on his yearly deductible. In June, Mr. Dixit meets with an accident.
Now the doctor’s fee amounts to Rs. 1,80,000. Here, he will pay Rs. 1,08,000 of this bill and the insurer will pay the rest of the amount. In November, he gets his cast removed and the bill amounts to Rs. 30,000. He does not have to pay any more as he has met the deductible for this year. His insurer will pay the full share of the bill.
The amount of the deductible is to be paid every year and is non-refundable even if the policyholder does not make any claim. Remember, the higher the deductible, the lower the premium, and vice versa.
What is co-payment in health insurance?
Co-payment is a final admissible claim amount that the policyholder, as well as the insurer, pays on a sharing basis each time he/she gets a particular type of health care service. The insured individual pays the share percentage on receiving a medical service and the insurer pays the rest of the money.
For instance, if an individual agrees to pay a co-pay of 10%, and the approved claim is of Rs. 1,00,000, then he will have to pay Rs. 10,000 and the rest 90% of the amount will be paid by the insurer.
So, co-payment and deductible differ in the sense that deductible is a yearly thing, whereas co-payment is an on-going process. Once the insured individual meets the deductible for the year, then until next year he/she does not have to pay anything. If any claim arises in the same year, then the insurer will bear the cost of treatment as per the policy terms.
The co-payment, on the other hand, is to be paid every time the policyholder gets a health care service. Nevertheless, the calculation may seem daunting, but understanding these terms will surely help you shop for the best health plan.
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