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. Incorporating the Co-Payment Clause in a Group Mediclaim Policy for employees can reduce the cost of your Group Health Insurance Policy.

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

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 will specify 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 claim that is filed under the GMC Policy.

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

Deductible in a GMC Policy means a cost sharing requirement under a Group Health Insurance Policy that provides that the Group Health Insurance Company will not be liable for a specified rupee amount

The Deductible in a Group Health Insurance Policy applies apply before any benefits are payable by the Group Health Insurer.

This Major difference between Deductible and Co-Pay clause is that the Deductible in a Group Mediclaim Insurance Policy 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 in a Group Health Insurance Policy is that it reduces the premium amount of the GMC Policy as the premiums for a GMC Policy with a Co-Pay Clause will be lesser than the premiums of a GMC Policy without a Co-Payment Clause.
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.

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

The major benefit of the Co-Payment Clause in a Group Mediclaim Insurance Policy for Employees is that it reduces the Premium of the GMC Policy. This can be very useful for a Group Health Insurance Policy for Small Businesses as they usually have a financial constraint in being able to afford large premiums.

However, a high percentage of Co-Payment in the Group Health Insurance Policy will mean that employees will have to bear a large portion of their own hospitalisation expenses out of their own pocket. This can put a large burden on the financial position of the employee.

The trick is to 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 at 📧 insurance@qian.co.in or call us on 📞 022-35134695.