A copay clause in health insurance refers to a small percentage of the insurance claim amount that the policyholder has to pay while the rest is paid by the insurance company. Not every health insurance plan has a copay clause but a large majority of them do. Insurers set copay clauses in their plans to prevent the abuse of the policy through unnecessary or overly expensive insurance claims. Copay is also beneficial for the insured as it can help bring down the cost of the insurance premiums. As the percentage of copay for the policyholder goes up, the cost of premiums comes down.
In this article, we’ll take a look at the various types of copay clauses in health insurance and what they mean.
Different Copay Clauses in Health Insurance!
● Copay on Medical Bills
When a medical insurance plan has a clause called ‘copay on medical bills’, it generally means that copay is applicable on each and every insurance claim made by the policyholder. Under this clause, the policyholder has to pay a certain percentage of every insurance claim in the form of a copay.
● Copay on Senior Citizens Insurance
Most senior citizen health insurance policies come with a mandatory copay for the policyholder/insured as the treatment expenses for the elderly are generally higher. Senior citizens are also more vulnerable to medical conditions and injuries due to their age, hence most of the plans come with a mandatory copay.
● Reimbursement Claims and Non-Network Hospitals
When a policyholder opts for treatment at a hospital of their own choice rather than a network hospital, they have to use a reimbursement claim. So, the insurance company levies copay on reimbursement claims and for claims on treatment at non-network hospitals. On the other hand, if a policyholder gets treatment at a network hospital linked to the insurance company, the insurer will waive off the copay and directly settle the bills with the network hospital.
● Copay on Metropolitan Locations
It is a widely known fact that the cost of private healthcare is remarkably higher in metropolitan cities like Mumbai or Bangalore compared to small towns and villages. As a result, insurance companies generally levy a copay when a policyholder gets treatment from a hospital in metropolitan areas.
● Copay on Pre-existing Conditions
Insurance companies also often levy a copay on policyholders who have pre-existing conditions at the time of buying the policy. Under this clause, the policyholder has to pay a percentage in the form of a copay only for medical treatments related to their pre-existing condition. Insurers charge this copay because the chance of a medical situation arising out of a pre-existing condition is higher.
The main reason why companies charge copays to the policyholders is to reduce their costs on the claims they are liable to pay. Moreover, copays discourage policyholders to make frivolous claims for unnecessary treatments. This also increases the chances of a policyholder opting for treatment at a cheaper hospital to save on copay costs, which helps the insurance company save money immensely and increase their profits. However, as a policyholder, you can take advantage of copays to reduce the premiums you have to pay. You can even choose to voluntarily increase the percentage of copay to lower your premiums. Remember to compare all available health plans and their features before buying so that that you can make an informed choice.