Health Insurance explained: Unraveling deductibles and co-pays
3 min read
Dec 19, 2023
When it comes to health insurance, understanding the smaller details can be quite overwhelming. It may happen that despite having insurance, you are asked to pay a certain portion of the hospital expense. At that moment, if you weren’t aware of the terms and conditions mentioned in the policy, you might feel cheated. That is why it is important to read the terms and conditions when it comes to any kind of insurance to ensure that you know what you are getting into.
So, don’t worry anymore as we help clear the confusion between two terms that often confuse policyholders - Deductible and Co-pay.
Let's break down the difference between these two concepts and help you make an informed decision about which option to choose:
Also Read: 8 Features You Must Compare Before Buying A Health Insurance Plan
Deductible:
A deductible is the amount you need to pay out of your pocket before your health insurance kicks in. It's like the down payment you make on a purchase. The deductible is typically an annual cost, and it can vary from one insurance plan to another.
For example, if your health insurance plan has a deductible of ₹10,000, you will need to pay that amount for your medical expenses before your insurance provider starts covering your costs. This means that if you incur a hospital bill of ₹20,000, you will pay ₹10,000, and your insurance will cover the remaining ₹10,000.
Co-pay:
On the other hand, a co-pay is a percentage of medical expenses that you are required to share with the insurance company. This is a cost-sharing mechanism where you pay a certain percentage, and the insurance company covers the rest.
For example, if you have a health insurance policy with a 20% co-pay clause and your hospital bill amounts to ₹15,000, you will pay ₹3,000 (20% of ₹15,000), and the insurance provider will pay the remaining ₹12,000.
Now, you might be wondering, "Which option should I opt for?" The answer depends on your individual healthcare needs and financial circumstances.
Choosing between Deductible and Co-pay:
1. Deductible:
- Consider a higher deductible if you are generally healthy and can manage unexpected expenses in case of a hospitalization.
- This can be advantageous for individuals who don't expect frequent medical expenses and want to keep their insurance premium costs down.
Also Read: Embracing peace of mind: Why personal Health Insurance is a must
2. Co-pay:
- Opting for a plan with a higher co-pay percentage can also lead to reduced premiums.
- It is more beneficial for senior citizens, who may not be able to afford high premiums but require frequent medical care and can benefit from lower premiums with a higher co-pay plan.
3. Balancing Act:
- It is possible to find a middle ground by opting for a plan with a moderate deductible and co-pay.
- For instance, selecting a plan with a ₹5,000 deductible and a 15% co-pay strikes a balance.
- This approach ensures you don't face excessive out-of-pocket costs while still maintaining reasonable monthly premiums.
- It provides a practical solution for individuals who want a manageable balance between upfront expenses and ongoing affordability in their health insurance.
Also Read: Buying a life insurance plan? Avoid these mistakes
Conclusion
Understanding the difference between deductible and co-pay is vital in making an informed decision about your health insurance. Whether you choose a high deductible for lower monthly premiums or opt for a co-pay to share the costs, it is essential to pick a plan that aligns with your healthcare needs and financial capacity. And with Axis Bank's range of insurance partners, you have the flexibility to select the plan that's just right for you.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
Disclaimer: Purchase of insurance product by Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank.
