In India, the co-payment function in health insurance was introduced into the cost-benefit logic. Its primary objective was to reduce costs and provide more effective strategies for avoiding unnecessary inconvenience.
When you and your insurer share the cost of your medical expenses, it is called a copayment. If you understand the copayments’ concept, you will know how much to pay and when to contribute to medical bills.
Insurers apply the fee condition differently depending on the scenario.
# Age-related copayment: In India, most insurers apply the copayment clause to older people. A common belief is that health deteriorates with age. There is the possibility of more frequent complaints, especially from the older age group. To minimize this risk, insurers apply the fee clause to policyholders after a certain age limit.
# Copayment based on a type of hospital: some insurers apply a copayment if the policyholder selects a different hospital than the network hospitals they are connected to.
# Co-payment associated with the area: some insurers offer different premiums depending on the insured region. A person who lives in a small town is offered coverage at a lower premium than a person who lives in a large city. In this case, the insurer can apply the co-payment condition if a person who signed the contract in a small town receives treatment in a metropolis where sanitary facilities are expensive.
# Illness-related copayment: Insurers can add a copayment clause when a person with a severe or pre-existing illness tries to obtain a health insurance plan. This is obvious because these diseases require expensive treatment.
In addition to the savings and reduced risk for the insurer, there are other logical reasons for introducing the co-pay feature in health insurance. Typically, people with health insurance choose fancy facilities and expensive hospitals, even when they don’t really need them. Therefore, in some cases, insurers have started to apply the fee clause to avoid such unnecessary claims. Companies believe that the insured will make a practical decision when assuming a part of a claim. Insurers use the installment clause to prevent health insurance misuse and encourage policyholders to make only the necessary claims.