The move, if implemented, could have a direct bearing on both health insurance premiums and customers’ out-of-pocket expenses at the time of a claim.
Amit Chhabra, Chief Business Officer, General Insurance, Policybazaar, said co-payment is not currently mandatory across all health insurance policies. It is already a feature in some products and can be either voluntary or mandatory depending on the policy and its terms.
Co-pay is essentially a cost-sharing mechanism under which the policyholder bears a specified percentage of the admissible claim amount, while the insurer pays the remaining amount, subject to the policy terms and sum insured.
For example, if a policy has a 20% co-pay and the admissible claim is ₹5 lakh, the policyholder would have to pay ₹1 lakh, while the insurer would pay ₹4 lakh. The customer’s actual out-of-pocket expense could be higher if there are other expenses that are not covered under the policy.
According to Chhabra, one potential benefit of co-pay is that cost-sharing can help make certain health insurance products more affordable, particularly when a higher customer contribution is reflected in the premium. However, the lower premium needs to be weighed against the amount the policyholder may have to pay during hospitalisation.
The impact could be more significant for customers with large hospitalisation claims, particularly senior citizens. Even a relatively modest co-pay percentage can translate into a substantial out-of-pocket payment when the claim amount is high.
Chhabra said the development should be viewed as an insurer and industry consideration rather than a government mandate. He also pointed to international markets where co-payment is an established feature of health insurance.”Lots of countries either have co-pay mandatory, or anyways have a large share of co-pay,” he said.
He added that India’s health insurance model is relatively open compared with many other markets, where customers may face co-payments, deductibles, restrictions on hospital access or other forms of cost-sharing.
The exact percentage of expenses that policyholders may have to bear if co-pay becomes mandatory has not been specified. The applicable amount would depend on the eventual regulatory framework and product terms.
For customers, the change could therefore mean balancing lower premiums against a higher financial contribution during a medical claim.