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Deductibles vs. Copayment in Health Insurance

Understanding health insurance plans may seem difficult due to multiple terminologies contained in the policy document. Therefore, before you decide to avail of a health plan, understanding some basic terminologies will be beneficial.

In some policies, both you and the insurance company pay for healthcare expenses. This is referred to as cost-sharing and some of these include coinsurance, deductible, and co-pay.

Meaning of co-pay

Co-pay or co-payment is a fixed amount that you must pay every time you avail of healthcare services. This amount varies from one type of service to another. The health insurance plans list the co-pay amount you need to pay while availing of various kinds of services. The co-pay also covers a certain portion of the doctor’s visit charges and medications. 

Not all medical insurance plans include co-payment. Alternatively, based on the kind of service covered under the health plan, it may include co-pay and deductible and/or coinsurance. Certain facilities like health check-ups or preventive care may be available at no additional out-of-pocket expenses.

It is important you read the policy terms and conditions carefully to avoid any surprises in the future.

Meaning of deductible

The deductible is a pre-determined amount that you need to pay before the insurer pays for the mediclaim plan benefits. For example, if you choose a deductible of INR 10000, you need to pay the expenses until you reach this limit. Any balance expenses exceeding INR 10000 will then be paid by the insurance company.

The premium amount reduces if you choose a higher deductible and vice versa. However, it is important to consider your financial situation before choosing a higher deductible to reduce the premium amount. You do not want to be in a situation where you have to shell out huge amounts that may cause financial distress in case the need to file a claim under the policy arises.

Meaning of co-insurance

This is your share of the healthcare costs. Generally, it is depicted as a percent of the amount that is allowed to be charged for a particular service under the health plan. The co-insurance amount is payable once you have incurred the entire deductible amount. For example, when you visit a doctor after meeting the aforementioned deductible amount (INR 10000); you do not have to pay the entire fees. If the co-insurance is 70:30, the insurer pays 70% and the balance 30% is payable by you.

It is recommended you compare health insurance policies online to make an informed decision. If you are healthy and do not expect to require expensive healthcare services, choosing a higher deductible to reduce the premium is suggested. 

However, if you have a pre-existing condition that requires constant care, opting for a higher deductible is not advisable. Similarly, if you are buying a mediclaim policy for family and have active children playing sports, opting for a lower deductible and paying a slightly higher premium is advisable.

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