- Enjoy options to cover yourself, your spouse, kids and even your parents
- Enjoy access to 10,000+ hospitals for cashless treatment
- Reduce your taxable income by up to Rs. 50,000 deduction under section 80D**
With healthcare costs on the rise, purchasing a health insurance policy with a comprehensive coverage has become a must if you want to safeguard your savings and avoid going through financial hassles in the event of a medical emergency. When you purchase a health insurance policy, your insurance provider will offer you a cover against medical expenses that you might incur in case of a hospitalisation or a medical treatment.
Your health insurance plan will pay the other 80 percent. If you meet your annual deductible in June, and need an MRI in July, it is covered by coinsurance. If the covered charges for an MRI are $2,000 and your coinsurance is 20 percent, you need to pay $400 ($2,000 x 20%). Your insurance company or health plan pays the other $1,600.
Based on the type of claim you raise (cashless or reimbursement), your insurance provider will either settle your medical bills directly with the hospital or reimburse you for the same. While a health insurance policy can be a great way to reduce the expenses that you may incur in the event of a hospitalisation, you will still have to pay a part of the hospitalisation bills if your policy came with a co-pay clause or if you opted for co-pay at the time of purchasing the plan.
What is Co-Pay?
- Most insurance, other than health insurance, does not have copays, but has a deductible which the insured must pay first, then the insurance company starts to pay. A copay works like this.
- Avoiding Copays. Many insurers promote the idea that copays help keep premiums down, and also keep a few customers from using all of a popular service. To most consumers, the price of health insurance is a major concern. For them, a copay is a bill that they would rather not have to pay.
Co-pay refers to that portion of the claim amount that is to be borne by the policyholder. While certain health insurance policies come with a mandatory co-pay clause, other health insurance plans give policyholders the option to choose a co-pay percentage as per their needs. Opting for a high co-pay will lower your premium payable, but will increase the amount that you have to pay in the event of a claim. Similarly, opting for a low co-pay will increase your premium payable, but will reduce the amount that you have to pay in the event of a claim.
Thus, for example, if you have opted for a co-pay of 10% and you raise a claim for Rs.10,000, the insurance provider will pay only 90% of the claim amount. The remaining 10% or Rs.1,000 will have to be borne by you.
Types of Co-Pay Clauses
Not all health insurance policies come with a mandatory co-pay clause. The co-pay clause may be applied to health insurance plans in the following manner:
- Co-Pay on all Medical Bills: In this case, the co-pay clause, whether mandatory or voluntary, is applied to all claims that are raised. Thus, the policyholder will need to pay a part of the claim amount for all claims raised.
- Co-Pay on Senior Citizen Policies: Most health insurance plans that are offered to senior citizens come with an inbuilt co-pay clause since treatment costs for senior citizens are usually quite expensive.
- Co-Pay for Reimbursement Claims or Treatment at Non-Network Hospitals: Certain insurance providers will specify a co-pay clause only for reimbursement claims or treatments undertaken at non-network hospitals. In this case, cashless claims will be borne fully by the insurer.
- Co-Pay for Hospitalisation in Metro Cities: Hospitalisation costs at a metro city are usually much higher than treatment costs at a smaller city or town. Thus, insurers might add a co-pay clause for treatments undertaken at large cities.
Why do Health Insurance Policies have a Co-Pay Clause
- To avoid unnecessary claims: In health insurance, there is no limit to the number of claims that a policyholder can make during a given policy year. Policyholders can continue making claims until the sum insured is completely exhausted. Thus, having a co-pay clause will reduce the chances of policyholders raising claims for small treatments/hospitalisations.
- To reduce the risk for the insurer: When there is a co-pay clause in the policy, the insured is expected to pay a certain part of the claim amount. Thus, in such a case, the insurer will not have to pay 100% of the claim amount, which, in turn, reduces the risk for the insurance company.
- To encourage judicious use of the policy: Having a co-pay component in your health insurance policy is one way for insurers to ensure that you use your policy judiciously. It also helps prevent fraudulent claims to a large extent.
- To lower premium amounts: Opting for co-pay will reduce the premium payable significantly. Thus, policyholders who don’t have too many health concerns and are looking to reduce their premium rate can opt for co-pay.
Things to Consider before Opting for a Co-Pay
Given how affordable a policy with a co-pay clause can be, it can be tempting to purchase a health insurance plan with a high co-pay percentage. However, before you purchase such a policy, make sure to understand your coverage needs and ascertain if you have the finances to pay for your part of the hospitalisation bills in case of an unplanned or planned hospitalisation.
FAQs on co-pay under health insurance
- How do I know how much I have to pay as co-pay at the time of claim settlement?
- Why are policies with the co-pay clause cheaper?
- Is co-pay the only way I can reduce the premium payable?
- Is co-pay applicable to cashless hospitalisation?
- Can co-pay be applied for specific benefits?
Your policy document will have details regarding co-pay – whether or not you should pay and if you need to pay, then what the percentage is. Make sure you read the policy document at the time of purchase so that you do not miss out on such fine details.
The co-pay clause reduces the insurer’s risk of paying a large amount. Since the co-pay clause keeps the insured in check, in terms of raising claims frequently or making fraudulent claims, the health insurance company offers the policy at a cheaper price than one that does not have a co-pay clause.
No, there are many ways by which you can save on your premium such as only choosing a sum insured amount that you require, not opting for unnecessary benefits or add-ons, maintaining a claim-free year, purchasing the policy online, etc.
Most insurance companies apply the co-pay clause only for reimbursement claims to encourage policyholders to get treatments in network hospitals. The insurer usually covers the complete expenses incurred by the insured person at a network hospital.
Yes, the co-pay clause can be applied to specific benefits such as the room rent. Choosing an A/C room or a suite may attract co-pay while regular rooms will not. Also, the benefit payable for the treatment of a critical illness or domiciliary hospitalisation expenses may require the policyholder to share the expenses incurred.
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By Jay Hancock, Kaiser Health News
Karen Taylor had been coughing for weeks when she decided to see a doctor in early April. COVID-19 cases had just exceeded 5,000 in Texas, where she lives.
Cigna, her health insurer, said it would waive out-of-pocket costs for “telehealth” patients seeking coronavirus screening through video conferences. So Taylor, a sales manager, talked with her physician on an internet video call.
The doctor’s office charged her $70. She protested. But “they said, ‘No, it goes toward your deductible and you’ve got to pay the whole $70,’” she said.
Policymakers and insurers across the country say they are eliminating copayments, deductibles and other barriers to telemedicine for patients confined at home who need a doctor for any reason.
“We are encouraging people to use telemedicine,” New York Gov. Andrew Cuomo said last month after ordering insurers to eliminate copays, typically collected at the time of a doctor visit, for telehealth visits.
But in a fragmented health system — which encompasses dozens of insurers, 50 state regulators and thousands of independent doctor practices ― the shift to cost-free telemedicine for patients is going far less smoothly than the speeches and press releases suggest. In some cases, doctors are billing for telephone calls that used to be free.
Patients say doctors and insurers are charging them upfront for video appointments and phone calls, not just copays but sometimes the entire cost of the visit, even if it’s covered by insurance.
Despite what politicians have promised, insurers said they were not able to immediately eliminate telehealth copays for millions of members who carry their cards but receive coverage through self-insured employers. Executives at telehealth organizations say insurers have been slow to update their software and policies.
“A lot of the insurers who said that they’re not going to charge copayments for telemedicine ― they haven’t implemented that,” said George Favvas, CEO of Circle Medical, a San Francisco company that delivers family medicine and other primary care via livestream. “That’s starting to hit us right now.”
One problem is that insurers have waived copays and other telehealth cost sharing for in-network doctors only. Another is that Blue Cross Blue Shield, Aetna, Cigna, UnitedHealthcare and other carriers promoting telehealth have little power to change telemedicine benefits for self-insured employers whose claims they process.
Such plans cover more than 100 million Americans — more than the number of beneficiaries covered by the Medicare program for seniors or by Medicaid for low-income families. All four insurance giants say improved telehealth benefits don’t necessarily apply to such coverage. Nor can governors or state insurance regulators force those plans, which are regulated federally, to upgrade telehealth coverage.
“Many employer plans are eliminating cost sharing” now that federal regulators have eased the rules for certain kinds of plans to improve telehealth benefits, said Brian Marcotte, CEO of the Business Group on Health, a coalition of very large, mostly self-insured employers.
For many doctors, business and billings have plunged because of the coronavirus shutdown. New rules notwithstanding, many practices may be eager to collect telehealth revenue immediately from patients rather than wait for insurance companies to pay, said Sabrina Corlette, a research professor and co-director of the Center on Health Insurance Reforms at Georgetown University.
“A lot of providers may not have agreements in place with the plans that they work with to deliver services via telemedicine,” she said. “So these providers are protecting themselves upfront by either asking for full payment or by getting the copayment.”
David DeKeyser, a marketing strategist in Brooklyn, New York, sought a physician’s advice via video after coming in contact with someone who attended an event where coronavirus was detected. The office charged the whole visit — $280, not just the copay ― to his debit card without notifying him.
“It happened to be payday for me,” he said. A week earlier and the charge could have caused a bank overdraft, he said. An email exchange got the bill reversed, he said.
With wider acceptance, telehealth calls have suddenly become an important and lucrative potential source of physician revenue. Medicare and some commercial insurers have said they will pay the same rate for video calls as for office visits.
Some doctors are charging for phone calls once considered an incidental and non-billable part of a previous office visit. Blue Cross plans in Massachusetts, Wyoming, Alabama and North Carolina are paying for phoned-in patient visits, according to America’s Health Insurance Plans, a lobbying group.
“A lot of carriers wouldn’t reimburse telephonic encounters” in the past, Corlette said.
Catherine Parisian, a professor in North Carolina, said what seemed like a routine follow-up call with her specialist last month became a telehealth consultation with an $80 copay.
“What would have been treated as a phone call, they now bill as telemedicine,” she said. “The physician would not call me without billing me.” She protested the charge and said she has not been billed yet.
By many accounts, the number of doctor encounters via video has soared since the Department of Health and Human Services said in mid-March that it would take “unprecedented steps to expand Americans’ access to telehealth services.”
Medicare expanded benefits to pay for most telemedicine nationwide instead of just for patients in rural areas and other limited circumstances, HHS said. The program has also temporarily dropped a ban on doctors waiving copays and other patient cost sharing. Such waivers might have been considered violations of federal anti-kickback laws.
At the same time, the CARES Act, passed by Congress last month to address the COVID-19 emergency, allows private, high-deductible health insurance to make an exception for telehealth in patient cost sharing. Such plans can now pay for video doctor visits even if patients haven’t met the deductible.
Dozens of private health insurers listed by AHIP say they have eliminated copays and other cost sharing for telemedicine. Cigna, however, has waived out-of-pocket costs only for telehealth associated with COVID-19 screening. Cigna did not respond to requests for comment.
Teladoc Health, a large, publicly traded telemedicine company, said its volume has doubled to 20,000 medical visits a day since early March. Its stock price has nearly doubled, too, since Jan. 1.
With such a sharp increase, it’s not surprising that insurers and physicians are struggling to keep up, said Circle Medical CEO Favvas.
“It’s going to be an imperfect process for a while,” he said. “It’s understandable given that things are moving so quickly.”
Health Insurance With No Deductible
Abbie VanSickle, a California journalist, wanted her baby’s scheduled wellness visit done remotely because she worried about visiting a medical office during a pandemic. Her insurer, UnitedHealthcare, would not pay for it, the pediatrician told her. Mom and baby had to come in.
“It seems like such an unnecessary risk to take,” VanSickle said. “If we can’t do wellness visits, we’re surely not alone.”
What Does No Copay Mean
A UnitedHealthcare spokesperson said that there was a misunderstanding and that the baby’s remote visit would be covered without a copay.
Jacklyn Grace Lacey, a New York City medical anthropologist, had a similar problem. She had to renew a prescription a few weeks after Cuomo ordered insurers to waive patient cost sharing for telehealth appointments.
No Pay Copay
The doctor’s office told her she needed to come in for a visit or book a telemedicine appointment. Chinese parents crack. The video visit came with an “administrative fee” of $50 that she would have had to pay upfront, she said — five times what the copay would have been for an in-person session.
“I was not going to go into a doctor’s office and potentially expose people just to get a refill on my monthly medication,” she said.