Health insurance norms for senior citizens have seen many crucial changes in the last few months. Besides the new rules introduced by the Insurance Regulatory and Development Authority of India (IRDAI), a key feature available for all senior citizens is the co-pay option that has an significant impact on policyholders and their healthcare expenses.
What is the co-pay option?
The co-payment option in health insurance for senior citizens is a contractual arrangement in which the policyholder is responsible for paying a specified percentage of the medical costs upfront, while the insurance provider covers the rest. For example, if a policy features a 10% co-payment clause and the total hospital bill amounts to approximately Rs 1 lakh rupees, the insured individual would contribute around Rs 10,000, with the insurer covering the remaining Rs 90,000.
The co-payment clause in a health insurance policy becomes applicable once a claim is initiated. Upon filing a claim, it is mandatory for you to fulfill the co-payment requirement, following which the insurance company covers the balance of the claim amount. Failure to meet the co-payment obligation will result in a delay in receiving the remaining claim funds from your insurance provider.
“Typically, insurance products with a co-pay feature come with lower premiums. This often makes health insurance more affordable for seniors. However, the co-payment clause encourages policyholders to focus on healthcare expenses, as they bear a significant share of the treatment cost. Insurance companies benefit from this feature as it helps manage risks, particularly for senior citizens who need frequent medical care. However, senior citizens are advised to assess this clause and its scope,” Shilpa Arora, co-founder and COO of Insurance Samadhan told Business Standard.
Should you go for a Health Insurance Plan with a co-pay clause?
Health insurance policies with a co-pay clause offer a beneficial option for policyholders. One of the primary advantages is the potential for a lower premium cost.
The presence of a co-payment clause allows policyholders to share the financial responsibility with the insurance company, resulting in reduced premium rates. It is important to note that the higher the co-payment amount, the lower the premium will likely be.
Another significant benefit of opting for a health insurance plan with a co-pay clause is its ability to deter individuals from making unnecessary or frivolous claims.
By requiring policyholders to contribute a portion of the claim amount, the co-pay clause discourages the filing of minor claims for ailments that can typically be managed at home, such as common colds, fevers, and diarrhoea. The inclusion of a co-payment obligation serves as a financial disincentive and can also mitigate the administrative burden associated with processing minor claims, thus encouraging policyholders to be more judicious in their claim submissions.
HA health plan with a co-pay clause functions to discourage individuals from seeking admission to costly hospitals. Consider a health policy incorporating a 10% co-pay provision. In a scenario where a minor treatment is pursued at a standard hospital, the approximate cost totals to Rs 20,000. With a 10% co-pay requirement, the individual's out-of-pocket expense reduces to Rs 2,000.
Conversely, if the identical treatment is sought at a specialized hospital, the expenses escalate to over Rs 50,000. The amplified cost is attributed to high-end hospitals charging 40-50% more in comparison to smaller healthcare facilities. Consequently, the individual would be responsible for a payment of around Rs 5,000 from their personal funds.
Points to note before buying co-pay insurance plan
> Begin by thoroughly evaluating your current health conditions as well as potential future healthcare needs. This assessment will aid in determining the most suitable co-pay percentage.
> Take the time to carefully review the offerings of various insurance providers to strike a balance between premium costs and co-pay obligations.
> It is essential to have a comprehensive understanding of all the terms and conditions associated with co-pays, including any exceptions or limitations on coverage.
> Prior to purchasing a policy, it is crucial to ascertain the waiting period for pre-existing conditions to avoid any unexpected issues.
> Consider seeking guidance from insurance advisors or financial planners as they can offer tailored insights based on your individual circumstances.
Experts suggest that senior citizens carefully evaluate their health condition and financial capacity when selecting a policy with a co-pay option. While co-pay can render premiums more affordable, it is imperative to ensure that you are prepared to manage potential out-of-pocket expenses in the event of a medical emergency.