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Co-payment Vs Deductible
Buying health insurance requires people to understand certain terms, which may sound confusing. Among those, deductible vs co-payment are the common ones. Both of them relate to cost-sharing, which means that a part of the healthcare expense is paid by policyholders while the insurer covers the rest. But there are differences between the two in terms of when & how much policyholders will pay and how much health insurance will cover.
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- Co-payment vs Deductible
What is Co-payment in Health Insurance?
A co-payment is a pre-defined amount which policyholders have to pay each time they avail a particular healthcare service. It is that portion of the claim that the insured agrees to bear in the event of a claim. The balance is to be paid by the insurance company.
For example, if Mr. Sharma agrees to a co-pay of 10% and the approved claim is ₹1 lakh, then he will need to shell out ₹10,000. The rest 90% i.e. ₹90,000, will be paid by the insurance company.
Discover more on this topic: What is Copay in Health Insurance
What is Deductible in Health Insurance?
A deductible is a fixed amount of money that policyholders have to pay each year before their mediclaim insurance kicks in completely. On paying off the deductible, health insurance plans begin to pick up their share of the medicare bills. Notably, higher deductibles will lead to lower premiums and vice versa. It can also be called an out of pocket expense.
For example, Mr. Batra has a deductible of ₹1,20,000. He gets the flu in January and sees a doctor. The doctor's bill is ₹12,000. Since he has not paid his deductible this year, he will have to pay the entire doctor's bill. After paying the doctor's fees, he is left with ₹1,08,000 to go on his yearly deductible. In March, he breaks his arm in an accident. Now the doctor's fee comes out to be ₹1,80,000. In this situation, he will pay ₹1,08,000 of this bill and the rest will be paid by his insurer. In April, he gets his cast removed. The bill comes out to be ₹30,000. Here, he does not have to pay any more since he has already met his deductible for this year. His insurer will pay the full share of the bill.
Key Differences Between Co-payment Vs Deductible
The table below highlights the difference between co-payment and deductible:
| Parameter | Co-payment | Deductible |
| Meaning | Co-payment is a fixed amount or a percentage of the medical bill that policyholders are required to pay each time they use a medical service. | A deductible is a specific amount policyholders must pay out of pocket for medical expenses before their insurance coverage begins. |
| Impact on Premium | If a co-pay feature is not included in a health policy, the insurance premium may be higher. | If the mediclaim policy includes a deductible, it typically does not directly affect the premium amount. |
| When it Applies | A co-payment is applied every time a policyholder make a claim for a covered medical service. | A deductible is a one-time payment made during the policy period, and once it is paid, the insurer starts covering eligible expenses. |
| Impact on Coverage | Co-payments continues to apply even after the deductible is met. | Once the deductible is met, insurance begins to cover costs according to the policy. |
Pro Tip: Policies with high co-payments or deductibles can lower your health insurance premiums but may increase your out-of-pocket expenses when seeking medical care.
The Bottom Line
The difference between deductible and co-payment is that a deductible is a once-in-a-year thing. If the policyholder has met his deductible for the year, he does not have to pay any further deductible until the next year. In contrast, a co-payment is an ongoing process, and the policyholder keeps on paying co-payments each time when he gets a healthcare service. So, make sure you go through your policy document carefully and understand clauses related to each in order to align your health insurance policy with your financial needs.
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