Copay In Health Insurance: What is the Co-Payment Clause in a Group Medical Insurance Policy?

Co-Payment Clause is one of the most important features of a Group Medical Insurance Policy and can reduce the cost of your Group Health Insurance Policy. This article discusses the Co-Payment Clause, how it works and advantages and disadvantages of the Clause.

What is the Co-Payment Clause in a Group Medical Insurance Policy? - Definition

A general form of Co-Pay Clause in a Group Health Insurance Policy reads as follows:

“Co-payment means a cost sharing requirement under a Health Insurance Policy that provides that the policyholder/insured will bear a specified percentage of the admissible claims amount. A Co-Payment does not reduce the Sum Insured.”

Essentially, Co-Payment in a Group Health Insurance Policy means that the claim amount will be shared by both the Insured and the Group Health Insurance Company. That means, the Insured will have to bear a portion of the expenses out of his own pocket. Co-Payment Clause in a GMC Policy prevents the Insured from raising fraudulent claims or unnecessary claims of small amounts.

How does the Co-Payment Clause in a Group Mediclaim Policy work?

If the employer opts for a Co-Pay Clause in a GMC Policy, the Group Health Insurance Company specifies the percentage of expenses that will have to be borne by the Insured himself. Co-Payment usually varies from 10-30% of Admissible Claim Amount and denotes the percentage of the Admissible Claim Amount that will be paid by the Insured.

Consider an employee insured under a Group Medical Insurance Policy with a Sum Insured of Rs3 lakhs and a Co-Payment Clause of 20% of Admissible Claim Amount. The Insured incurs the following hospitalisation expenses because of an illness that he suffers from:

Medical Expenses	Amount
Room Rent Expenses (7 days)	Rs70,000
Treatment Cost	Rs30,000
Doctor Visit Charges	Rs20,000
Reports	Rs30,000
Total Expenses	Rs1,50,000

The employee’s Group Health Insurance Plan has a Co-Pay of 20% of Admissible Claim Amount (Rs3 lakhs). This meant that the employee would have to pay 20% of the total expenses, that is, 20% of Rs1.5 lakhs which is Rs30,000 from his own pocket. The GMC Policy will only pay the remaining 80% of the incurred hospitalisation expenses of Rs1,20,000. The Co-Payment applies for each and every Insurance Claim filed under the Group Health Insurance Policy.

What is the difference between Deductible and Co-Pay Clause in a Group Mediclaim Insurance Policy?

Deductible in a Group Health Insurance Policy is the amount of loss that the Insured must bear from his own pocket before the Insurance Company starts paying out the claim. The Deductible applies before any benefits are payable by the Group Health Insurance Company. The major difference between Deductible and Co-Pay clause is that the Deductible is a fixed amount that the Insured needs to bear for each claim while Co-Pay is the Percentage of Admissible Claim Amount that the Insured needs to bear.

What are the advantages of a Copayment Clause in a Group Mediclaim Insurance Policy?

The Co-Payment Clause in a GMC Policy offers the following advantages:

Reduction of Premiums: One of the advantages of Co-Payment Clause is that it reduces the cost of the Group Health Insurance Policy as the premiums with a Co-Payment Clause are lesser than the premiums of a GMC Policy without a Co-Payment Clause. This can be very useful for Small Businesses as they usually have a financial constraint in being able to afford large premiums.
Reduces Unnecessary Claims of Minor Amounts: Under the Co-Payment Clause, the Insured has to bear a percentage of admissible Claim Amount before any payments are made by the Group Health Insurance Company. As a result, the Co-Payment Clause deters unnecessary filing of claims of minor amounts since some amount of expenses will have to be borne by the Insured himself.

What are the disadvantages of a Copayment Clause in a Group Mediclaim Insurance Policy?

The disadvantage of the Copayment Clause is that the Insured must bear a fixed percentage of medical expenses for each and every admissible claim. This can become difficult for employees who cannot afford to bear such expenses and can put a financial strain on the employee.

Should you purchase a Group Health Insurance Policy with a Co-Payment Clause?

Employers should strike a fine balance between the Premiums of the GMC Policy and the percentage of Claim Amount that the Insured will have to bear out of his own pocket. This article explains an important feature of Group Health Insurance Policy: Co-Payment Clause. Another important feature of Group Health Insurance Policy is the Room Rent Limit. You can read our detailed blogpost on Room Rent Limit in Group Health Insurance Policy.

So, if you wish to purchase a Group Mediclaim Insurance Policy, you can reach out to us via email at 📧 insurance@qian.co.in or call us on 📞 022-35134695. We would be glad to assist you