What is Co-pay, Deductible & Coinsurance: Meaning, Difference, Features

5 min read Posted on 10 Oct 2024

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When it comes to availing health care insurances and schemes, it is difficult to understand all the terms and their impact on the policy. Though it is quite confusing when it comes to buying insurance, for health insurance there is a set of certain terms that are hard to understand.

Terms such as copay, coinsurance, and deductible, can be confusing for someone with limited knowledge to understand.

In the following article, we will explain the meaning of copay, coinsurance, and deductible. We will see what they mean together and how they are different.

What is the Meaning of Co-pay in Health Insurance?

Copay or Co-payment refers to a fixed amount of money you need to pay for certain types of treatment when the rest balance amount will be paid to the insurer. This can be a pre-decided amount or a percentage of the total cost of treatment depending on the policy you choose.

If you have a copay health insurance of 10% then you will have to pay Rs.1500, while the company will bear the expense of Rs.13500.

Features of Co-payment in Health Insurance

The lower the copay, the higher is the insurance premium.
Co-payment amount/percentage is always fixed according to the service you are availing.

What do you Mean by Deductibles in Health Insurance?

Deductibles are a fixed amount of money that you have to pay before your policy kicks in to take charge of your medical treatment. This is a certain amount that you have to pay towards your medical bills before your policy kicks into action.

Features of Deductibles in Health Insurance

Higher deductible means lower premium payment.
A lower deductible is recommended if you have a chronic medical condition that needs a regular visit to medical health professionals. Otherwise, choose a higher deductible for lower premium payments.

What is the Meaning of Coinsurance?

Coinsurance refers to the percentage of a treatment cost you’ll have to pay once you’ve paid the deductibles. This is usually a fixed percentage and is like copayment.

Features of Coinsurance

Policyholders will have to pay the deductible before claiming coinsurance.
The percentage is fixed.
The percentage of coinsurance is about the out-of-pocket maximum amount that you can spend in a year after which the company will bear the full expenses.

Understanding Copay, Coinsurance, and Deductibles Using an Example

Let’s suppose the bill is Rs.15,000 and your policy says the deductible is Rs.2000. So, you’ll have to pay just Rs.2000 while the balance of Rs.13,000 will be borne by the insurer company.

Health Insurance Terms Explained

Let’s suppose the bill is Rs.15,000 and your policy says the deductible is Rs.2000. So, you’ll have to pay just Rs.2000 while the balance of Rs.13,000 will be borne by your insurance company.

Suppose the deductible is Rs.5000. That means you’ll have to pay Rs.5000 towards your treatment before the policy can come into effect.

Coinsurance comes into effect once deductibles have been paid. Let us say you have a bill of Rs.10,000 and you have a deductible of Rs.5000. Then coinsurance will be levied on the sum of Rs.5000.

Difference between Copay and Deductible

Copay is the fixed amount that you have to pay towards your treatment. It can be a fixed amount per the nature of the treatment or a fixed percentage.

The deductible is the amount that you need to pay as a share towards your medical bill upon which your policy comes into effect.

Difference between Copay and Co-insurance

Copay is the fixed amount that you have to pay for your treatment. It can be a fixed amount per the nature of the treatment or a fixed percentage.

A deductible is the fixed amount that you have to pay as a share of your medical bill upon which your policy comes into effect.

Difference between Coinsurance and Deductible

Coinsurance refers to the percentage of treatment cost you’ll have to pay once you’ve paid the deductibles. This is usually a fixed percentage and is similar to co-payment.

The deductible is the amount that you need to pay as a share towards your medical bill upon which your policy comes into effect.

What is the Meaning of Copay with Deductible?

While deductibles and coinsurance are clauses that are implemented by insurance providers simultaneously, some of them also choose to put together Copay and Deductible. If your insurance does the same, this is what it means for you:

You have to pay a fixed amount towards your treatment plan but your insurance premium will only start once you have paid your deductibles.
If and when the plan kicks in, you’ll have to pay the fixed copayment amount every time you raise the claim while the outstanding amount will be paid by the insurance provider.
You’ll only have to pay a small amount of premium towards your policy, making it cheaper.

Should You Opt for a Health Insurance Plan with Copayment, Coinsurance and Deductible Clauses?

Even if your premium amount is reduced in a cost-sharing policy, your liability towards the share you have to pay on claim will increase and so you’ll always need to have readily available money to cover the cost. It is better to opt for a policy that is free of cost-sharing clauses and with a plethora of premiums offered in India, it is possible to find one that is good and doesn’t involve cost-sharing terms.

Important Note: Be sure to check all the terms and conditions before choosing a policy that best fits you.