Copay vs Coinsurance vs Deductible

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Copay vs Coinsurance vs Deductible

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Being aware of certain terms can prove helpful while choosing a suitable insurance policy. Here, some similar-sounding terms can be a hurdle. So, to bring some clarity, the following sections will highlight the difference between Copay, Coinsurance and Deductible in health insurance.

Difference between Copay, Coinsurance and Deductible in health insurance: Definition with examples

The terms Copay, Coinsurance and Deductible in health insurance may seem to have similar meanings, but they refer to different aspects of health insurance. Here’s a table highlighting these aspects with examples.

Copay/Copayment Deductible Coinsurance
Copay also known as Copayment in health insurance refers to a fixed amount or percentage of an approved medical bill that needs to be paid by the insured. The remaining amount will be settled by the insurer. Example: Let’s say you are availing of medical treatment worth Rs. 50,000. And Rs. 10,000 is the amount defined under the Copay clause of your policy. Then, you will have to pay Rs.10,000 from your pocket and the remaining Rs. 40,000 will be paid by your insurer. Alternatively, under the same circumstance, the Copay clause may require you to bear 10% of the treatment costs instead of a fixed amount. In that case, you will have to pay Rs. 5,000 from your pocket and your insurer will settle the remaining Rs. 45,000. Deductible refers to a fixed sum payable by the insured towards medical expenses. Once this sum runs out, the insurer will start pitching in and cover medical expenses (up to the sum insured). Example: Let’s say you are availing of medical treatment worth Rs. 50,000 and Rs. 7,000 is the defined Deductible sum as per your policy. Then, you just need to pay Rs. 7,000 from your pocket; the remaining Rs. 43,000 will be contributed by your health insurer. Further explanation: Usually, there are two types of deductibles. First, a Base Cover Deductible, where a fixed amount is payable by the insured out of the total medical bill. Second, Deductible in Top-up. A top-up cover is sold on top of the base cover sum insured. Here, the top-up sum insured triggers once the base sum insured is exhausted. Here, the base cover sum insured is referred as deductible. Similar to Copay, Coinsurance is a fixed percentage of the medical bill that needs to be paid from the side of the insured. In this case too, the remainder amount will be borne by the insurer. However, this clause usually comes into play only after Deductible has been paid. Example: Let’s say you are availing of medical treatment amounting to Rs. 50,000, with Rs. 7,000 as Deductible and 10% as Coinsurance. So, once the Deductible is paid, the sum will come down to Rs. 43,000. Then 20% of that amount, which is Rs. 8,600, will have to be paid by you and the remaining Rs. 34,400 will be paid by your insurer. Further explanation: From an underwriting perspective, Coinsurance is defined as a relationship between two insurance companies. If two insurance companies cover a particular risk in an agreed ratio it is called a coinsurance arrangement.

Note that these definitions and examples are shared only for explanatory purposes. Exact details might vary from policy to policy and insurer to insurer, and actual calculation will be based as per the applicable terms and conditions of the policy. It’s suggested to discuss the nuances about Copay, Coinsurance, and Deductibles with your insurer before making any insurance-related decisions.

Learn More about “Copay” in Health insurance.

Copay vs Deductible in health insurance

The following are some of the key differences between Copay and Deductible in health insurance.

Parameter Copay Deductible
Application Copay is either a fixed amount or a percentage of the medical bill that needs to be borne by the insured while availing of medical treatment. A Deductible is a fixed sum of money that needs to be paid by the insured towards a medical expense. Once this sum is depleted, the insurer will start contributing.
Premium payable If Copay is absent, your premium can be higher. If a policy already mentions Deductibles, which is the usual case, it might not have a direct impact on the payable premium.
Coinsurance Copay and Coinsurance usually do not coexist in a health insurance policy. Coinsurance usually comes into effect only after the deductible is paid.
Application If Copay is applicable, then it might be considered every time you raise a claim. Deductible is a one-time payment made towards medical expenses before the insurance plan commences its coverage.

Differences between Copay and Coinsurance in health insurance

Although Copay and Coinsurance may seem similar, they have a few distinct features. Here is a table that differentiates Coinsurance vs Copay.

Parameter Copay Coinsurance
Application Copay is a financial contribution that the insured needs to make towards a medical expense. This contribution may either be a fixed sum or a percentage of the medical bill. The rest will be paid by the insurer. Coinsurance is a fixed percentage of a medical bill that needs to be paid by the insured. The rest will be contributed by the insurer.
Process You need to make a financial contribution towards every medical expense that may come up. Contribution needs to be made only after the Deductible limit has been reached.
Deductible The clauses of Copay and Deductible are usually not found together in a health insurance policy. Usually, Coinsurance is payable only after the Deductible is exhausted.

Coinsurance vs Deductible in health insurance

Here is a table that distinguishes between Coinsurance and Deductible in health insurance.

Parameter Coinsurance Deductible
Application Under Coinsurance, if you raise a claim for a medical treatment, you have to pay a fixed percentage of the expense and your insurer will pay the rest. Deductible is a fixed sum you need to pay if medical expenses arise and you raise a claim for them. Medical costs above and beyond the fixed sum will be covered by your insurer.
Terms of payment Coinsurance is applicable every time you raise a claim. The Deductible sum needs to be paid only once during a policy term.
Payment amount The exact amount you pay may vary from claim to claim. The Deductible is a fixed sum and will be defined in the policy wordings.
Liability The liabilities are more under Coinsurance because if the medical expenses are high or frequent, you may have to spend a lot from your pocket. Since Deductible is a fixed amount, you just have to pay the fixed sum and your insurer will take care of all the other costs.

Outcomes of Copay in health insurance

The following are the key outcomes of Copay in health insurance.

Is it wise to opt for a health insurance plan with a Copayment, Coinsurance or Deductible clause?

Usually, it might not be ideal to buy a policy that has a Copayment, Coinsurance or Deductible clause in the policy wordings. Policies that have these clauses usually have a lower premium; however, whenever medical expenses crop up, you have to bear a portion of the medical expenses. Having said that, do compare policies based on their features and services as well and not such clauses.

Opting for a health insurance policy that offers 100% coverage is certainly better. That way, you can receive health care and not have to worry about the extra cost. Also, make sure to read the terms and conditions of the policy before making any insurance-related decision.

Frequently asked questions

The following are some of the frequently asked questions regarding Copay, Coinsurance and Deductible.

What is the difference between Copayment and Deductible in health insurance?

In health insurance, Copayment is a sum payable or a percentage of a medical bill that the insured has to bear. The remaining expense is borne by the health insurer. Deductible on the other hand, is a fixed one-time sum that the insured has to pay towards medical expenses. Once this sum runs out, the health insurer will start covering the medical expenses as per the terms of the policy.

Is it preferable to have 0% Coinsurance?

Yes, it is preferable to have 0% Coinsurance. That way, you will not need to bear any medical expenses. Your health insurer will cover all your medical costs as per the terms of the policy.

What is the usual Copay percentage found in health insurance policies?

Health insurance policies usually have a copay percentage spanning between 20 to 30%.

Is Copay applicable during cashless hospitalisation?

Yes, Copay is applicable even during cashless hospitalisation.

What does it mean to have a Copay with a Deductible?

Having a Copay with a Deductible means having a plan with both those clauses. In such a case, the Copay clause will activate only after the Deductible has been met.

What does cost-sharing mean in health insurance?

Cost-sharing in health insurance means that the cost of a medical expense that is claimed is shared by the insurer and the insured. Copay, Deductible and Coinsurance are some of the common cost-sharing clauses in a health insurance policy.

Will cost-sharing reduce my health insurance premium?

Yes, if cost-sharing is included in your health insurance, it can reduce the policy premium. However, it is not a recommended option.

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