Difference between Co-payment and deductibles

When it comes to purchasing health insurance, there are a few phrases you should understand that can be quite complicated.

An unaware person can get confused easily when it comes to insurance terms like co-payment and deductibles. Both co-payment and deductibles are examples of cost-sharing. It implies that you will have to pay a portion of your healthcare expenses, while the insurer will pay the balance. They both sound similar, aren’t they? But there’s a difference between these two terms. Let’s understand.

What is a co-payment in health insurance?

Copay refers to when policyholders need to bear a specified portion of their medical care costs while the insurer bears the balance. This might be a fixed sum or a fixed percentage of the treatment costs.

For example, if your insurance coverage has a copay clause of Rs. 5000 for treatment expenses and the treatment costs Rs. 25,000, you will be expected to pay Rs. 5000 toward your treatment, with the insurer covering the remaining Rs. 20,000.

Similarly, if the copay clause demands you to bear 10% of the total cost incurred, you will be expected to pay Rs. 1000, with the insurer covering the balance of 90% (Rs. 9000).

Below are the features of co-payments:

• The copay clause requires the policyholder to cover a specific and fixed amount while the insurer bears the balance of the claim.
• The copay amount is decided upon the medical service availed by the policyholder.
• A lower copayment leads to a higher premium payment.
• These clauses are generally found in senior citizen health insurance plans.
• These are more prevalent in metropolitan areas where treatment costs are higher.

What are deductibles?

Deductibles are a fixed amount of money that policyholders need to pay before their insurance coverage begins to contribute to their medical treatment. The insurance provider decides whether deductibles are paid annually or per treatment.

For example, if your policy has a deductible of Rs. 5000, you would be expected to pay for treatment expenses up to Rs. 5000 before your insurance policy kicks in.

Below are the features of deductibles:

• It is levied to help health insurance companies in protecting their interests against frequent and unjustified claims.
• It helps in the reduction of insurance premium costs.
• It may increase the overall cost of medical treatment for an individual.

Difference between copay and deductible

Criteria	Co-payment	Deductibles
Applicability	A copay is the fixed amount of medical costs that policyholders need to pay while insurance companies cover the balance. It can be provided as a fixed amount or as a percentage of the treatment cost.	A deductible is a fixed sum that policyholders need to pay before their insurance plan begins to pay and covers the majority of their medical bills.
Form	A copay can be a fixed amount or a percentage of the sum insured under your health insurance coverage.	Deductibles in health insurance are typically in the form of a fixed amount.
Frequency	Every time you utilize your health insurance policy to get cashless insurance or file a reimbursement claim, you have to pay a copay.	Deductibles are counted for the entire policy year. You can utilize your health insurance plan without needing to pay for deductibles for each claim once you have met the limit of medical expenses fixed by your health insurance deductible.
Scope	Copay is typically included in specific types of health insurance policies, such as Senior Citizen Health Insurance Plans and Critical Illness Insurance Plans.	Deductibles are generally included in most health insurance policies which offer a layer of protection to the insurer against small claims.

Whilst co-payment and deductibles in health insurance lower your health insurance premium, they also increase your financial exposure toward medical expenses. Therefore, it is important to understand the complexities of these terms and keep them in mind while choosing health insurance coverage.