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What is copayment in a health insurance plan?

Copayment means that you have to pay part of the claim amount yourself. Understand how this works and select plans which do not have a copayment option.

By: Sachin Telawane | 
Read Time: 3 minutes, 7 seconds | 
Last Updated: 12-01-2022
What is copayment in a health insurance plan?
Over the past few years, we all have seen that medical treatment expenses have shot up. This has led to an increase in the number of health insurance policies purchased during this period. Having a health insurance policy doesn't mean that all the medical expenses are covered in it. There are a few expenses that medical policies don't cover due to certain reasons. This is where the copayment feature comes into the scenario. 

Copayment refers to a clause where the policyholder agrees to pay a part of their medical expense and the rest is paid by the health insurance provider. The percentage borne by the policyholder and the insurer is always mentioned in the policy. This percentage differs in every health insurance company. A health insurance policy with a copayment clause usually tends to have a lower premium.

Features of Co-payment

  • The policyholder is liable to pay only a part of the medical expenses and the remaining amount is paid by the insurer.
  • This facility can be availed for any medical service or hospitalization, lab tests, and more.
  • It is majorly applicable for senior citizens’ health insurance plans.
  • The premiums are generally on the lower side as compared to usual health insurance plans.

How does it work?

Let’s understand how copayment works in a health insurance policy with an example. 
Say Mr.Patil, aged 65 years, purchases a health insurance policy of a sum insured amount of Rs.5 lakhs and with a copayment clause. The clause states for a 20% copayment. So, if Mr.Patil files a claim for Rs. 3 Lakhs, then he will have to pay 20% (Rs. 60,000) of the claim amount, and the rest would be paid by the health insurer.

Copayment can have 2 different scenarios:

  • When the copayment is higher at the policyholder’s end, the premium charged for such policies is lower.
  • In case the copayment is less on the policyholder, the premium charged will be on the higher side.

Why do companies have Copayments?

The main reason why a health insurance company provides copayment is to save on their expenses during claims. However, there are a few more reasons why companies give a copayment option. A few of which are mentioned below:
  • To discourage policyholders who tend to make unnecessary claims. Since there will be a copayment, a part of the medical expense will have to be borne by the policyholder. 
  • Many people have a tendency to get their medical treatments done in an expensive and lavish hospital. Especially, when they have a health insurance policy. However, insurance companies offer copayment clauses to discourage people from doing so. 
Say, for example, if a policyholder gets himself treated at a regular network hospital, then the bill amount would range somewhere near Rs.10000. With the copayment clause of say 20%, he will have to pay just Rs.2000. However, if he had opted for treatment at an expensive hospital, the bill amount would have increased to Rs.50000 for the same treatment as a regular hospital. Then in that scenario, he would have to pay Rs.10000. So, getting treated in a regular hospital would cost him less at any given point in time.
  • The copayment clause is provided by the insurance company to encourage honest use of health insurance policy.  


You can consider buying medical insurance taking into account the copayment clause and knowing what is a copayment in a health insurance policy. We leave the choice to you, if you wish to buy a medical policy with a copayment clause or not. Generally, senior citizen health insurance plans have a copayment clause. You can compare and buy the best health insurance plans at MyInsuranceClub and get assistance from our trained and certified advisors.
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Sachin Telawane
Sachin Telawane is a Content Manager and writes on various aspects of the Insurance industry. His enlightening insights on the insurance industry has guided the readers to make informed decisions in the course of purchasing insurance plans.

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