What is Copay in Health Insurance?

  • postauthorEditorial Staff
  • postdateJune 27, 2024
  • postreadtime13 min read
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Copay in Health Insurance

The concept of health insurance in India involves individuals or families purchasing health insurance policies from various public and private insurers. In exchange for regular premiums paid by the insured to the insurance company, the policy provides financial protection against medical expenses.  

The health insurance in India has been growing rapidly, driven by various factors such as rising life expectancy, higher income levels, increasing incidence of lifestyle-related diseases, and the proliferation of health insurance coverage.  

The India health insurance market is expected to grow at a compound annual growth rate of 11.55% from 2023 to 2030, reaching USD 30,291.2 million by 2030.  

One of the features that health insurance companies offer policyholders is the copay concept. Copay in the health insurance industry refers to the portion of medical expenses that the policyholder is required to pay out of pocket, while the insurance company covers the remaining amount. 

Understanding copay in health insurance is essential for making informed decisions about your health insurance plan. While copay can offer lower premiums and encourage responsible healthcare usage, it can also lead to increased out-of-pocket expenses and limited control over costs.

Also, Read: Waiting Period in Health Insurance

What is Copayment (Copay) in Health Insurance? 

Copayment, commonly known as copay, is a cost-sharing arrangement in health insurance where the policyholder pays a predetermined fixed amount or percentage of the medical expenses, while the insurance company covers the remaining portion. 

Example of Copay with calculation 

For example, if the total medical expenses for treating an illness amount to Rs 2 lakh and the copay percentage in the policy is 20%, the insured would pay Rs. 40,000 (20% of Rs 2 lakh), and the insurer would cover the remaining Rs. 160,000. It is important to note that copay is not applicable for all medical expenses and may vary based on the terms and conditions of the health insurance policy. 

The copay amount typically ranges between 10% to 30% of the total medical expenses, with the remaining amount covered by the insurer. Understanding the copay clause and its implications is essential for policyholders to take the right decisions about their health insurance coverage and financial responsibilities.  

Companies like Onsurity offer copay as part of their employee healthcare plans. The company provides monthly comprehensive employee healthcare solutions tailored for SMEs, MSMEs, startups, and growing businesses in India.

Also, Read: Group Health Insurance for Small Business

How Does Copay Work in Medical Health Insurance? 

Here’s how copay typically works in medical insurance: 

  • The policyholder chooses a health insurance plan that includes a co pay clause, which outlines the fixed amount or percentage of the medical expenses that the policyholder must pay. 
  • When the policyholder visits a healthcare provider or hospital and receives a medical service, they must pay the copay amount directly to the healthcare provider or hospital. 
  • The healthcare provider bills the insurance company for the remaining amount of the medical service. 
  • The insurance company pays the remaining amount to the healthcare provider. 

Copay amounts vary depending on the type of medical service received and the health insurance plan. For example, a policy may require a Rs 3000 copay for a visit to a primary care physician and a Rs 5000 to be paid for a specialist visit.

Quick Read: How Does the Health Insurance Claim Process Work?

Types of Copay Clauses in Health Insurance 

The types of copay clauses in health insurance policies can vary based on different scenarios and conditions. Here are the main types of copay clauses along with examples:

types of copay clauses in health insurance

1. Age-related Copay

Insurers may impose a copay requirement for older individuals to limit their risk due to higher treatment costs associated with age-related illnesses. 

Example: An insurance policy may include a copay clause for individuals above a certain age, such as 60 years, where they are required to pay a percentage of medical expenses for specific treatments.

2. Hospital-related Copay

Copay may apply to reimbursement claims when treated at non-network hospitals, while cashless claims at network hospitals may not have a co pay clause.  

Example: If a policyholder chooses to receive treatment at a hospital outside the insurer’s network, they may be subject to a copay, whereas treatment at network hospitals may not require a copay.

3. Medical Conditions-related Copay 

Copay clauses may be imposed for expensive treatments like critical illnesses or pre-existing conditions to share the cost burden with the policyholder. 

Example: A policy may have a copay clause for treatments related to chronic conditions, where the insured must pay a fixed amount or percentage of the medical expenses.

4. Location-related Copay

Insurers may apply a copay provision for treatments in major cities where medical expenses are higher compared to smaller areas. 

Example: If a policy includes a copay clause for hospitalisation in metropolitan cities, the insured may have to pay a percentage of the medical expenses incurred in these locations. 

These examples illustrate how different types of copay clauses in health insurance policies can impact the policyholder’s financial responsibility for medical expenses based on specific conditions and circumstances.

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Importance of Copay in Medical Insurance 

Copay, or copayment, is an important feature in health insurance policies as it serves several key purposes:

1. Reduces Premium Costs

By requiring policyholders to share a portion of the medical expenses, health insurance with copay clauses tend to have lower premiums compared to those without copay.

2. Encourages Responsible Healthcare Usage

Copay incentivises policyholders to be more judicious in their use of healthcare services, as they have a financial stake in the expenses. This helps prevent unnecessary claims and overconsumption of medical services.

3. Manages Insurer’s Risk

Copay helps insurance companies reduce their overall financial liability and risk exposure by sharing the burden of medical expenses with policyholders.

4. Provides Flexibility in Coverage

Policyholders can choose between plans with varying copay percentages (e.g., 10%, 20%, or 30%) to balance their premium costs and out-of-pocket expenses.

5. Promotes Cost-sharing

A copay is a cost-sharing mechanism that distributes the financial responsibility for medical expenses between the insurer and the policyholder.

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Advantages of Copay in Health Insurance 

The advantages of copay in health insurance include:

1. Reduced Policy Premium 

Health plans with copayments often have lower premiums as policyholders share the insurance company’s financial responsibility, leading to cost savings for the policyholder. 

2. Filing Minor Claims 

Copay discourages unnecessary claims, as policyholders are less likely to submit claims for minor medical treatments due to the out-of-pocket cost involved. This helps in reducing frivolous claims and paperwork.

3. Customisable Premiums 

Policyholders can choose copay percentages to customise their premiums, allowing them to balance out-of-pocket expenses with premium costs based on their healthcare needs and financial situation

Disadvantages of Copay in Health Insurance 

The main disadvantages of copay in health insurance are:

1. Financially Burdensome 

Copay requires policyholders to bear a portion of the cost of healthcare services, leading to increased out-of-pocket expenses. This can be financially burdensome, especially for frequent medical visits or treatments.

2. Discourages Healthcare Utilisation 

Copay can discourage policyholders from seeking necessary healthcare services, potentially reducing access to care. This can have negative health consequences and may lead to higher healthcare costs in the long run.

3. Complexity 

The copay clause can be complex to understand, leading to confusion and frustration for policyholders when it comes to healthcare costs. Understanding copay obligations and how they apply to different services can be challenging.

4. Policyholders May End Up Paying More 

Even though a higher copay amount means lower premiums, the policyholder may eventually pay more towards the expenses of the treatment rather than saving on premium amount. 

5. Unpopular With Policyholders 

Copay clauses in health insurance plans are typically less well-liked and less likely to be purchased by individuals unaware of copay and coinsurance. 

Also, Read: What is Group Term Life Insurance?

Is Copay Mandatory in Health Insurance? 

Copay is not mandatory in all health insurance plans. While copays are common and standard in most health insurance plans, some insurance plans may not require copays for certain services, such as preventive care visits. The decision to include a copay clause in a health insurance plan varies depending on the insurer and the specific policy.

Copays are one of the ways insurance companies share healthcare costs with their members, encouraging appropriate use of healthcare services and discouraging unnecessary doctor visits or emergency room visits. While copays may be an added expense for individuals, they are essential to most health insurance plans.  

Quick Read: Mandatory Employee Insurance in India

How Does Copay Differ From Deductible? 

While both copayments and deductibles are forms of cost-sharing in health insurance, they differ in terms of timing, amount, accumulation, coverage triggers, and their relationship to coinsurance.  

Let’s take a quick look at the difference between copay and deductible:  

  Copay  Deductible 
Definition  Copay is a cost-sharing mechanism between the insured and the insurer, where the insured pays a predetermined fixed amount for covered healthcare services, while the insurer covers the remaining portion of the cost.  A deductible in insurance refers to the amount of money that an insured person must pay out-of-pocket before their insurance policy starts to cover the costs of a claim. 
Payment structure  Copay is a fixed amount paid at the time of service.  The deductible is a fixed amount paid before insurance coverage starts. 
Frequency  Copay is paid every time a claim is made.  A deductible is usually paid once per policy year.   
Impact on premium  Copay can affect health insurance premiums based on the amount.  The relationship between deductibles and premiums is inverse: higher deductibles typically result in lower premiums, while lower deductibles lead to higher premiums 

Understanding the differences between copay and deductible is essential for policyholders at the time of taking the policy, to make informed decisions about their health insurance coverage and financial responsibilities.

Recommended Read: Health Insurance with OPD Cover

Factors Affecting Copayments in Health Insurance 

In India, several factors influence the copayments required in health insurance plans. Here are some key reasons that can influence copayments in health insurance in India. 

1. Type of Health Insurance Plan 

Different types of health insurance plans are available in India, including individual health insurance, family floater plans, and group health insurance provided by employers. The type of plan can affect copayment structures and amounts.

2. Insurance Provider 

Insurance companies in India offer a variety of health insurance products with different copayment requirements. Copayment amounts may vary between insurers based on their underwriting policies, risk assessment, and pricing strategies.

3. Network of Hospitals and Providers 

Many health insurance plans in India have networks of empanelled hospitals and healthcare providers. Copayments may be lower for services obtained from network providers compared to those obtained from non-network providers. Insurers may negotiate discounted rates with network providers, resulting in lower copayment amounts.

4. Geographical Location 

Copayment amounts may vary depending on the geographical location of the insured individual. Healthcare costs, including provider fees and treatment expenses, can vary between regions in India. Copayments may be adjusted to reflect these differences.

5. Regulatory Requirements 

Regulatory authorities such as the IRDAI may prescribe guidelines or regulations related to copayments in health insurance plans. Insurers are required to comply with these regulations, which may impact copayment structures.

6. Market Competition 

Competition among insurance companies in the Indian market can influence copayment amounts and structures. Insurers may adjust copayments to attract customers or remain competitive with other plans in the market.

Also, Read: Documents Required for Health Insurance

How Does Copay Impact Health Insurance Premiums? 

Copay, or copayment, can significantly impact health insurance premiums in the following ways: 

1. Inverse Relationship 

The co payment clause in a health insurance policy is inversely proportional to its premiums. When you opt for a higher copay percentage, it reduces your overall insurance premiums, but you will have to pay a more considerable amount during a claim.

Conversely, opting for a lower copay will increase your insurance premiums but reduce the amount you need to pay at the time of a claim. 

2. Reduced Insurer’s Liability 

By including a copayment clause, insurance companies can reduce their overall financial liability and risk exposure towards policyholders. Since policyholders must bear a portion of their claims, the chances of misusing policies or filing unnecessary claims are reduced. 

3. Lower Premiums for Higher Copay 

Policies with higher co payment clause have lower premiums as the policyholder must bear a higher healthcare cost. On the other hand, policies with lower copay amounts tend to have higher premiums because the insurance company is responsible for a higher healthcare cost. 

4. Responsible Healthcare Usage 

The copayment clause incentivises policyholders to use healthcare services judiciously, as they have a financial stake in the expenses. This helps prevent unnecessary claims and overconsumption of medical services. 

Also, Read: Cashless Health Insurance

Why Do Insurers Include a Copay Clause in Health Insurance Policies?

Insurers include a copay clause in health insurance policies for several reasons:

1. Risk Reduction

By incorporating a copay clause, insurers reduce their financial risk by sharing the cost of healthcare services with policyholders.

2. Cost Sharing

Copayments help to share the cost of healthcare services between the policyholder and the insurance company, ensuring that both parties contribute to the expenses.

3. Prevention of Insurance Fraud

Copayments can help prevent insurance fraud by discouraging policyholders from misusing their policies or filing unnecessary claims. Policyholders are less likely to seek unnecessary medical care if they have to pay a portion of the cost themselves.

4. Promotes Responsible Healthcare Usage

Copayments incentivise responsible healthcare usage by policyholders, as they are more likely to consider the necessity of medical services before seeking treatment.

5. Premium Reduction

Copayments incentivise responsible healthcare usage by policyholders, as they are more likely to consider the necessity of medical services before seeking treatment.

Quick Read: What is a Group Health Insurance Policy?

Things to Consider Before Opting for Health Insurance with Copay Clause

Before opting for health insurance with a copay clause, there are several essential factors to consider to ensure you choose a policy that aligns with your healthcare needs and financial situation. Here are the key points to keep in mind:

1. Your Healthcare Needs 

Consider the type of medical services you anticipate needing in the future. Evaluate if you have pre-existing conditions that require frequent medical attention or expensive treatments. This assessment will help determine if a copay plan is the most suitable option for you based on your healthcare requirements.

2. Affordability

Calculate the total cost of the policy, including premiums of co pay amounts, to ensure it fits within your budget. Assess if you can afford the copayments over time, especially if you have a chronic medical condition that may require ongoing treatment.

3. Copayment Amount

Understand the co pay in health amounts for different healthcare services and providers. Some policies may have varying copayments for services like specialist visits or hospitalisation. Knowing these amounts will help you anticipate your out-of-pocket expenses for different types of medical care.

4. Network Providers 

Check if the policy includes a network of healthcare providers and if there are lower copayment amounts for services received from in-network providers. Utilising network providers can help you save on healthcare costs and maximise the benefits of your policy.

5. Coverage Limitations

Understand the coverage limitations of the policy, including any exclusions or restrictions on coverage. Ensure the policy covers the specific services you need and clarify if the copayment clause applies to all covered services.

6. Policy Benefits

Look into additional policy benefits such as wellness programs, preventive care services, and prescription drug coverage. These benefits can help you save on healthcare costs and improve your overall health while considering a copay plan.

Suggested Read: Difference Between Life Insurance and Health Insurance

Tips for Managing Copays 

Managing copayments effectively in India involves several strategies to minimise out-of-pocket expenses while maximising the benefits of health insurance coverage. Here are some tips for managing copayments:

1. Understand Your Policy

Review your health insurance policy carefully to understand the copayment amounts and requirements. Familiarise yourself with the types of services or treatments that require copayments and the corresponding amounts.

2. Choose Network Providers

Whenever possible, seek healthcare services from network hospitals and providers empanelled by your insurance company. Copayments are often lower for services obtained from network providers, helping you save on out-of-pocket expenses.

3. Opt for Preventive Care

Take advantage of preventive care services covered by your health insurance plan, such as health check-ups, vaccinations, and screenings. Preventive care can help detect health issues early and avoid more costly treatments later on.

4. Use Generic Medications

If your policy covers prescription drugs with copayments, opt for generic medications whenever possible. Generic drugs are typically more affordable than brand-name drugs and can help reduce your out-of-pocket costs.

Also, Read: Domiciliary Hospitalisation


While copay can lead to lower premiums, it’s crucial for policyholders to carefully consider their healthcare needs, financial situation, and ability to cover out-of-pocket costs before opting for a plan with a copay clause. Policyholders should also review the specific terms and conditions of the copay clause in their health insurance policy.

Ultimately, the decision to choose a health insurance plan with a copay provision depends on individual circumstances and preferences. Policyholders should weigh the advantages of lower premiums against the potential for higher out-of-pocket expenses when seeking medical care.


1: What is copay in health insurance?
In health insurance, a copayment (commonly referred to as a copay) is a fixed amount of money that an insured individual is required to pay out of pocket for covered healthcare services at the time the service is received 
2: Should I purchase health insurance with or without copay?
The choice between health insurance with or without copay depends on your individual preferences, financial capacity, and healthcare needs.
3: How does a copay differ from coinsurance?
While a copay is a fixed amount you pay for a service, coinsurance is a percentage of the cost you pay after meeting your deductible. Both are mechanisms to share healthcare costs between you and your insurance provider. 
4: What is 20% copay in insurance?

20% of copay in health insurance means that the policyholder is responsible for paying 20% of the total covered medical expenses, while the insurance company pays the remaining 80%. 

5: Is copay refundable?
The entire of co pay in health insurance is not refundable. 
6: Do all health insurance plans have copays?
While some health insurance plans include copayment clauses as a cost-sharing mechanism where the policyholder pays a fixed amount or percentage of the claim, others may offer the option to include copayments based on individual preferences.
7: Can copay amounts change over time?
Yes, Copay amounts may change annually.
8: What happens if I can't afford the copay?
It’s essential to communicate openly with your healthcare provider and insurance company to explore available options and find a solution that works for your financial circumstances. 
9: How can I find out what my copay amounts are for specific services?
To find out what your co pay in health insurance amounts are for specific services you can contact your service provider. 

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