Copayment and Deductible

 

What is copayment in health insurance? What is a deductible? How are they different?

While copay is a fixed percentage of the claim amount, a deductible is a fixed amount to be paid by the insured before the insurer pays its part of the claim amount.

The following tables show copay or deductible amounts payable under various situations:

Table 1(Copayment)

Sum Insured	Claim Amount	Copay %	Amt Payable By Insured	Amt Payable By Insurer
500000	300000	20%	60000	240000
500000	500000	20%	100000	400000
500000	600000	20%	100000*	500000
500000	1000000	20%	500000**	500000

*Even though the copay amount is Rs.120000, insured has to pay Rs.100000 only as copay cannot reduce the sum insured

**In this case, the copay amount should be Rs.200000 but insurer’s liability is restricted to sum insured hence insured will have to bear Rs.500000.

Table 2(deductible)

Sum Insured Claim Amt. Deductible Payable by insured Payable by insurer

500000 300000         10000         10000                          290000

500000 8000         10000         8000*                           Nil

500000 600000         10000         100000**                           500000  

*as the claim amount does not cross 10k, insured has to bear Rs.8000

**as deductible cannot reduce the sum insured and insurer’s liability is limited to sum insured, insured pays Rs.100000 & insurer Rs.500000.

A copay is generally applicable if age of entry is 60 years & above. Sometimes it may be imposed if the insured from a lower zone undergoes treatment at a higher zone.

Deductibles are typically used as threshold limits for top up plans.