Co-payment and Deductible in Health Insurance

A co-payment is a fixed percentage of an approved claim that you pay yourself, while a deductible is a fixed rupee amount you must absorb before the insurer starts paying. Both are cost-sharing terms defined by IRDAI, both lower what the insurer pays out, and importantly neither one reduces your sum insured. This guide explains both in plain language with worked examples so you know exactly what you will pay at claim time.

The insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), has standardised these two terms so every policy uses them the same way.

Co-payment. IRDAI defines it as a cost-sharing requirement under a health insurance policy that provides that the policyholder or insured will bear a specified percentage of the admissible claim amount. The standard wording also states that a co-payment does not reduce the sum insured.

Deductible. IRDAI defines it as a cost-sharing requirement under a health insurance policy that provides that the insurer will not be liable for a specified rupee amount in the case of indemnity policies, which applies before any benefits are payable. The standard wording also states that a deductible does not reduce the sum insured.

So the headline difference is simple. A co-payment is a percentage of each approved claim. A deductible is a fixed rupee amount that comes off the top before the insurer pays anything.

Both terms move money from the insurer's side to yours, but they bite at different points.

• Deductible bites first. It is the entry threshold. Until the bill crosses the deductible, the insurer pays nothing. Above it, the insurer pays the rest, subject to the policy limits.
• Co-payment bites on the approved amount. Once a claim is admissible, you keep a set percentage of it and the insurer pays the remaining share.

Some policies have only one of these. Some have both. Always read your policy schedule to see which apply to you.

These figures are illustrative examples, not official rates. Always use your own policy numbers.

Suppose your approved hospital bill is 1,00,000 rupees and your policy has a 20 percent co-payment.

1. Your share at 20 percent is 20,000 rupees.
2. The insurer pays the remaining 80,000 rupees.
3. Your sum insured is not touched by the 20,000 rupees you paid.

If the same policy had a 10 percent co-payment instead, your share would be 10,000 rupees and the insurer would pay 90,000 rupees.

Again, these are illustrative example numbers, not standard rates.

Suppose your approved bill is 1,00,000 rupees and your policy carries a 25,000 rupee deductible.

1. You pay the first 25,000 rupees yourself.
2. The insurer pays the remaining 75,000 rupees, within policy limits.

If a later bill in the same year is only 20,000 rupees and your deductible is 25,000 rupees, the bill never crosses the threshold, so the insurer pays nothing and you pay the full 20,000 rupees. Check whether your deductible resets each claim or applies once per policy year.

Some plans apply a deductible and a co-payment to the same claim. This is an illustrative example only.

Suppose your approved bill is 1,00,000 rupees, your deductible is 20,000 rupees, and your co-payment is 10 percent.

1. First, remove the 20,000 rupee deductible. That leaves 80,000 rupees.
2. Then apply the 10 percent co-payment on that 80,000 rupees, which is 8,000 rupees that you keep.
3. The insurer pays 72,000 rupees. You pay 28,000 rupees in total.

The exact order of operations can vary by policy, so confirm the sequence with your insurer in writing.

• Senior-citizen and older-age plans. Many plans for older buyers include a co-payment to share high-age treatment costs. The percentage and the trigger age differ by product, so check your specific policy rather than assuming a fixed rule.
• Zone-based co-payment. Some insurers split India into pricing zones by city cost. If you buy in a lower-cost zone but get treated in a costlier metro, the policy may apply an extra co-payment. Read the zone clause before you travel for treatment.
• Voluntary deductible to cut premium. You can choose to accept a deductible in exchange for a lower premium. You agree to pay the first slice of any claim, and the insurer rewards that with a cheaper policy. It suits people who can comfortably absorb small bills and mainly want cover for big ones.
• Super top-up deductible. A super top-up plan only starts paying once your yearly hospital costs cross a set deductible threshold. It sits on top of a base policy or your savings and is a low-cost way to extend cover for a very large bill.

This is the part people get wrong, so it is worth stating plainly. Your sum insured is the maximum the insurer will pay in a policy year. Under the IRDAI standard definitions, neither a co-payment nor a deductible reduces the sum insured. They change how a single claim is split between you and the insurer, but the overall cover stays at its full value for the year. A co-payment or deductible is a sharing of each bill, not a cut in your total cover.

1. Ask for the exact co-payment percentage and whether it applies to every claim or only certain treatments.
2. Ask the rupee value of any deductible and whether it resets per claim or applies once per policy year.
3. Check for a zone-based co-payment if you may get treated in a different city.
4. If a plan looks cheap, check whether a high co-payment or deductible is the reason.
5. A voluntary deductible can cut your premium, but only take one you can actually pay out of pocket.
6. Read the Customer Information Sheet, which IRDAI now requires insurers to give you. It must list deductibles and co-payment clearly.

For a deeper look at reading official documents and asserting your rights as a citizen, see The RTI Playbook.

No. A co-payment is a percentage of an approved claim that you pay. A deductible is a fixed rupee amount removed before the insurer pays. A policy can have one, the other, or both.

No. Under the IRDAI standard definitions, neither a co-payment nor a deductible reduces the sum insured. They only change how a single claim is split between you and the insurer.

Sometimes. Many plans, especially for younger buyers, have no co-payment. Some insurers let you remove or reduce a co-payment for an extra premium. Compare products and read the schedule before buying.

A voluntary deductible lowers your premium because you agree to pay the first slice of any claim yourself. It suits people who can absorb small bills and mainly want protection against a large hospital cost.

In a super top-up, the deductible is the yearly amount your hospital costs must cross before the plan pays. It is a low-cost way to extend cover for a big bill on top of a base policy or your savings.

They are stated in your policy schedule and in the Customer Information Sheet that IRDAI requires every insurer to give you. If anything is unclear, ask the insurer to confirm it in writing.

By Dr. Shrawan Kumar Pathak