What is co-payment?

Co-payment in insurance is the fixed percentage or amount of a claim that the policyholder must pay out of pocket, while the insurance company pays the rest. It is commonly used in health insurance to share risk between the insurer and the insured.

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✅ Simple Definition

Co-payment is the portion of a medical expense that the insured has to pay, with the insurer covering the remaining amount.

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✅ How Co-Payment Works

1. You receive medical treatment.
2. Total bill = ₹50,000.
3. Co-payment clause = 10% → you pay ₹5,000, insurer pays ₹45,000.
4. If co-payment is 20%, you pay ₹10,000, insurer pays ₹40,000.

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✅ Key Points

• Co-payment reduces the insurer’s liability and encourages policyholders to avoid unnecessary claims.
• Higher co-payment → lower premium, because you are sharing more risk.
• Co-payment is different from deductibles:
  • Deductible: You pay a fixed amount before insurance coverage starts.
  • Co-payment: You share a percentage of the bill after coverage begins.

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✅ Example

• Health insurance policy: ₹1,00,000 sum insured, 10% co-payment.
• Hospital bill: ₹20,000
• You pay: ₹2,000
• Insurance pays: ₹18,000