The ACKO India Health Insurance Index 2024 revealed that healthcare costs in India are going up by 14% per year. To combat the increasing claim costs, insurance providers are also proportionately increasing the cost of insurance. As a result, insurance premiums have gone up by 10% to 15% in the last year. One of the effective ways to reduce your insurance premium is to increase your out-of-pocket expenses while asking your insurance provider to cover the rest. Copay, deductible, and sublimit in health insurance are some of the optional parameters that you can customise to make health plans more affordable. Let's understand copay, deduction, and sublimit in health insurance in detail.
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Understanding Co-pays, Sub-limits, and Deductibles for Family Plans
A co-payment is a portion of the medical bill that you agree to pay out of pocket first when making a claim.
For example, if your ₹5 lakh insurance has a 10% copay and your hospital bill is ₹50,000, even though this amount is within the sum assured, you always have to pay 10% of the bill first. So, with a 10% co-pay, you must pay ₹5,000 first, and the insurer will cover the remaining ₹45,000. Co-pay results in out-of-pocket expenses with every claim, regardless of the size of the medical bill.
Sublimit in health insurance is the maximum amount that your insurer will pay for specific medical expenses like room rent, doctor's fees, or surgery.
For example, if your policy has a ₹5,000 sub-limit for room rent and you choose a room with a rent of ₹7,000 per day, you must pay the ₹2,000 difference out of your pocket.
A deductible in health insurance is another way to reduce your premium by agreeing to pay out-of-pocket first. You agree to pay a fixed amount every time you make a claim before the insurance provider pays for it.
For example, with a ₹10,000 deductible, for a medical bill of ₹50,000 (with a ₹5 Lakh health policy), you must pay ₹10,000 first, and the remaining up to the sum assured will be covered by your insurer. So, with deductibles, you must pay first and ask the insurer to cover the rest of the medical bill. Now, even with a ₹2 Lakh medical bill, your deductible will only be ₹10,000 for the policy year.
When you buy an insurance policy, you expect the insurer to cover all medical expenses. Comprehensive insurance plans with zero out-of-pocket expenses are expensive, and not many families would opt for them.
Cost-sharing mechanisms such as copays, sublimits, and deductions allow you to pay a portion of the medical bills while asking the insurer to cover the rest. This way, you share the risk, and insurers can offer affordable premiums. This decision impacts your premium and the amount you need to pay during a claim. So, balancing them with your budget is crucial.
Cost-sharing reduces the risk and responsibility of the insurance provider. At the same time, it increases your out-of-pocket expenses if you make a claim. It offers the following benefits for policyholders:
Policies with higher out-of-pocket contributions have lower premiums. This allows you to get a more comprehensive health insurance policy at an affordable premium.
Insurers are willing to offer lower premiums as it reduces their exposure to high claims. It can be beneficial, particularly for health insurance for elders.
Knowing that you will have to pay out-of-pocket first for your medical expenses can help you make informed health decisions.
Here is a brief overview of the difference between copay, deductible, and sublimit in health insurance:
| Feature | Copayment | Sub-limit | Deductible |
| Definition | A fixed percentage or amount paid by the insured at the time of claim | A limit on specific expense categories (e.g., room rent, doctor’s fees) | The amount the policyholder must pay before insurance kicks in |
| Impact on Claim | Reduces the insurer’s liability for each claim | Caps the amount for specific expenses | Reduces insurer’s liability for all claims until the deductible is met |
| Example | 10% of the hospital bill | ₹5,000 for room rent | ₹10,000 for all claims each year |
| Paid By | Insured person | Insurer pays up to the sub-limit, excess paid by the insured | The insured person initially, then the insurer after the deductible is met |
While cost-sharing helps you lower insurance premiums, you must be cautious to avoid the following common mistakes:
Some plans may have a high copay percentage, making insurance premiums more affordable.
If you don't understand the sublimit in health insurance on specific expenses, you may end up choosing a room with a higher rent or face larger doctor's fees, which your insurer may not cover.
Deductibles apply to every claim you make, and if your medical bill is lower than the deductible, then you must pay all of it.
Co-pay, deductible, and sub-limit in health insurance are essential to identify affordable plans. Knowing how they may influence your out-of-pocket expenses can enable you to make a wise choice when purchasing health insurance. Think about your family's healthcare requirements and pay attention to the policy conditions before making a choice.
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Reviewed by Rupinderjit 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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