Co-payment and deductible in health insurance, with worked examples

What a co-payment is

A co-payment, or co-pay, is a share of each claim that you pay yourself. IRDAI's Customer Information Sheet format, set by the Master Circular of 29 May 2024, describes it as a specified amount or percentage of the admissible claim amount to be paid by the policyholder.

"Admissible" means the part of the bill your policy covers, after non-payable items, sub-limits and any proportionate deduction are taken out. The co-pay comes off that figure.

IRDAI's standard definition from July 2020 adds that a co-payment does not reduce the sum insured. Your cover limit for the year stays the same.

What a deductible is

A deductible is a fixed amount that the insurer does not pay. The 2024 Customer Information Sheet format describes it as an amount up to which the insurer will not pay any claim, and which it takes off the total claim when the claim is larger.

A deductible can apply per claim, per year or both, and the sheet must say which. IRDAI's 2020 standard definition says a deductible also does not reduce the sum insured.

Co-paymentA co-payment, or co-pay, is a share of each claim that you pay yourself.DeductibleA deductible is a fixed amount that the insurer does not pay.

A co-payment worked example

In this example, the hospital bill is ₹2,50,000. The insurer finds ₹50,000 of it not payable, such as non-payable items and amounts above a sub-limit. The admissible claim is ₹2,00,000. The policy has a 20% co-payment.

Example hospital bill₹2,50,000Insurer pays₹1,60,000Co-payment₹40,000Not payable₹50,000

A round example, not a real bill.

Example step	Amount
Hospital bill	₹2,50,000
Not payable under the policy	₹50,000
Admissible claim	₹2,00,000
Co-payment at 20%	₹40,000
Insurer pays	₹1,60,000
You pay in all	₹90,000

In this example, you pay the ₹50,000 that was never covered plus the ₹40,000 co-pay.

A deductible worked example

In this example, the policy has a deductible of ₹50,000 a year. The family makes two claims in the same year.

Two example claims in one year (example)First claim₹0 of ₹40,000Deductible used ₹40,000Second claim₹1,90,000 of ₹2,00,000Deductible used ₹10,000

The solid part is what the insurer pays; the hatched part is the deductible, yours to pay.

Example claim	Admissible amount	Deductible used	Insurer pays
First claim	₹40,000	₹40,000	Nothing
Second claim	₹2,00,000	₹10,000, the rest of it	₹1,90,000

In this example, the first claim sits wholly inside the deductible. The second claim uses up the last ₹10,000 of it, and the insurer pays the rest. A per-claim deductible works differently, taking the full amount off every claim, so check which kind your policy has.

When a policy has both

Some policies have both a deductible and a co-payment. Your policy wording sets the order in which they apply, and the order changes the result.

In this example, the admissible claim is ₹2,00,000, with a ₹50,000 deductible and a 20% co-payment, and the wording applies the deductible first. The deductible leaves ₹1,50,000. The 20% co-payment on that is ₹30,000. The insurer pays ₹1,20,000, and you pay ₹80,000 of the admissible amount.

Where to find these in your policy

Look at row 8 of your Customer Information Sheet, "Financial limits of coverage". It lists sub-limits, co-payment and deductible, with the policy clause numbers. The standard Arogya Sanjeevani wording IRDAI published in 2020, for example, set a 5% co-payment on every claim. Read the clause in your own policy for:

whether the co-pay applies to every claim or only some,
whether the deductible is per claim or per year,
the order in which they apply.

Have a hospital stay coming up? Send your policy on WhatsApp and a person checks it for you.

Questions

What does 20% co-payment mean in health insurance?

You pay 20% of every admissible claim and the insurer pays the other 80%. The 20% is worked out after non-payable items and other policy deductions are removed from the bill.

Is a deductible the same as a co-payment?

No. A deductible is a fixed amount you bear before the insurer pays anything. A co-payment is a share of each claim that you bear every time.

Does co-payment reduce my sum insured?

No. IRDAI's standard definitions from July 2020 say neither a co-payment nor a deductible reduces the sum insured.

Is co-payment charged on the full hospital bill?

It is charged on the admissible claim amount, which is the part of the bill the policy covers. So you also pay anything the policy does not cover, on top of the co-payment.