What Is Co-pay In Health Insurance?

The term “health insurance” is a term most people are used to hearing. However, it is different in some ways from all the other types of insurance available. In health insurance plans, even after you pay premiums, there are complicated out-of-pocket costs like deductibles, copays, and coinsurance. 

If you fall ill or are injured and don’t know how health insurance works, you could become one of the millions each year who are caught off guard by high medical bills. 

Understanding what copay is, is also a basic rule towards understanding the basics of health insurance; ensuring you make the right financial decisions. The purpose of this article is to ensure you understand what Copay in health insurance is, and how to fully utilize it. Keep reading.  

What is Copay in Health Insurance?

A copay, also known as copayment is a flat fee that you pay on the spot each time you go to your doctor or fill a prescription. 

Copay in health insurance is an agreement in which the policyholder will need to pay a portion of the medical expenses on their own and the insurance company will pay the remaining amount. 

In every insurance contract that has a copay, it is included with co-pay clauses. For example, if you hurt your foot and go see your doctor, or you need a refill of your medicine you take from time to time, the amount you pay for that visit or medicine is your copay. 

Your co-pay amount is printed right on your health plan ID card. Copays cover your portion of the cost of a doctor’s visit or medication. 

However, you must know that you do not always have a co-pay. Not all plans use copays to share in the cost of covered expenses. 

Some plans, on the other hand, use both co-pay and a deductible/coinsurance, depending on the type of covered service. 

Also, some services may be covered at no out-of-pocket cost to you, such as annual checkups and certain other preventive care services.  

If your insurance policy has a co-pay clause, you will agree to pay a part of the medical expense out of your pocket, and the insurer will cover the rest. 

Today, many insurance companies have the co-pay clause included in them. The co-pay amount is usually a fixed amount for different services and drugs, varying depending on the nature of treatment or medication required. 

Co-payments in health insurance can vary for different services within the same plan, like drugs, lab tests, and visits to specialists. 

Generally, plans with lower monthly premiums have higher copayments. Plans with higher monthly premiums usually have lower copayments. 

What are the Features of Co-pay Health Insurance?

Co-pay health insurance has features peculiar to it alone. To identify a co-pa, you must know that: 

· It is an amount paid or a percentage of the total for certain medical treatments and medication, while under the said insurance plan.  

· A part of the expense is taken care of by the insured, and the majority is paid for by the insurer. 

· It is a different fixed amount that’s charged depending on the medical service rendered. 

· Larger co-insurance and co-pay ratios in favour of the insurer mean lower premiums for the insured. 

· Co-pays in health insurance are mostly applicable to senior citizens in health insurance policies.  

· Co-pay policies are more prominent in major established cities. 

How is Co-pay different from Co-insurance?

Co-pay in health insurance and co-insurance are used to being used interchangeably. You must, however, know the difference between the both of them. 

The major difference between a co-pay and co-insurance is that under co-insurance, the insurer and the insured enter into an agreement where each party agrees to pay a percentage of the total cost. 

The co-insurance percentage is represented depending on the agreement, with the insurer’s contribution written first and the insured person’s contribution second. 

Co-pay is the fixed amount paid for different health care services.  

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Why do Insurance Companies have Co-pay clauses?

There are certain reasons why having a co-pay in health insurance is advantageous. Some of the reasons are-  

· Having a co-pay in health insurance discourages people from making unnecessary claims since they would be required to pay a portion of the expense.  

· It also discourages the misuse of health insurance policies. 

· Having co-pay in health insurance also discourages people from undergoing treatment in expensive hospitals and healthcare centres because they would also be required to pay a part of the money. This will discourage the average insurance holder from wasteful expenditure at more expensive hospitals. 

· Copay in health insurance also has a way of encouraging honest and judicious use of health insurance policies. The fact that co-payment means you will have to pay an amount out of your pocket, means that you will see your hospitalization or medical treatment as an expense that you must incur as well. This will ensure that you use it right, as it brings with it a sense of ownership. 

· Copay fees vary among insurers but typically are $25 or less. For example, an insurance plan with copays may require the insured to pay $25 per doctor visit or $10 per prescription.  

· Co-pay mitigates the risk and liability for the insurer A co-pay clause of 10% in all its policies means a direct 10% saving for the insurance company. 

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What are the Disadvantages of Co-pay?

Some insurance companies do not have co-pay in their health insurance. Since Co-pay is so advantageous, the question then is “why?” Why have they decided to lose out on the beautiful benefits attached to having co-pay?

Several reasons why this could be so are:  

· An insurance company knows that if the co-pay amount is too high it may deter the insured person from seeking life-saving medical attention and care, thus rendering the insurance policy completely useless. On the other hand, a person who uses co-pay in health insurance and does not see the need of having the insurance in the first place would most likely back out.   

· Medical insurance products and policies offered with co-pay are generally less popular, and less likely to be bought. A person who understands co-pay and co-insurance would choose a policy that does not have such clauses. An insurer who offers to pay the entire medical expense will have better products and higher sales simply because of that fact. 

· Higher co-pay means less premium. While this is true, it is only beneficial for the insured person, as long as you don’t need to cash in your insurance policy. But if something happens, all that money you saved on premiums will have to be paid towards the treatment expenses. 

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Is Using Co-pay in Health Insurance worth it?

Health insurance policies today are expensive, and recently, they do more than covering of hospital bills. serve to do more than just cover hospital bills. 

Everyone has their own choice as to what the perfect health insurance plan entails. However, you must know that all the great policies come at a greater premium cost.  

First of all, if you are a person in the prime of health and good physical condition, without a history of past diseases, pre-existing illnesses, or any susceptibility to falling critically ill in the future, a co-pay policy could enable savings for you. 

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You will not need to cash in the entire policy and can make use of the many benefits that come with it. 

As such, you must take into consideration, the entire state of your health before opting for health insurance with co-pay.  

What is the Difference between a Deductible and a Co-pay?

Deductible and co-pays are regular terminologies used in health insurance. While a deductible is an amount you pay for most eligible medical services or medications before your health plan begins to share in the cost of covered services, co-pay is the flat fee you pay at the time of service. 

Depending on how your plan works, what you pay in copays may count toward meeting your deductible. This also depends on the insurance company you are taking out the health insurance plan with.  


Before accepting co-pay in health insurance, look through to see your health status. If you are healthy, with a healthy lifestyle as well, and do not feel you may need to cash in your insurance, then taking a copay in health insurance can be it for you.

However, if you lead an unhealthy lifestyle, have a susceptibility to medical conditions, and feel you may need to cash in your insurance at some point – take a regular health insurance policy. 

Frequently asked questions

What is co-pay

Co-pay health insurance is a type of insurance where a small portion or percentage of the total hospitalization is paid by the insured person, and the insurer covers the major portion. 

Why do people prefer co-pay?

People opt for such policies as they reduce the burden of large premium payments and are cheaper than other health insurance policies. 

Is there co-pay in India?

There are many health insurance providers in India with co-pay policies. Some of them are- United India Insurance Co. Ltd., New India Assurance Co., Oriental Insurance Co. Ltd., National Insurance Co., and SBI General Insurance Co. Ltd., amongst others.  

Why is co-pay cheaper?

The risk and liability of paying off a claim are divided between the insurer and the insured, hence the policy is cheaper. 

What is a premium?

A premium is an amount paid for an insurance policy. In most cases, plans with relatively high premiums are likely to have low co-pays, while plans with low premiums are more likely to have high co-pays. 



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