• zInternationalStudents Blog

  • Saturday, February 16, 2019

  • What is the co-pay or co-insurance clause?

    Filed Under: Health Insurance

When you buy health insurance, there will be many variables in it that decide the dollar amount you pay as your premium for health care. The two most important ones are deductible and co-pay. In an earlier post we have seen how the deductible affects the premium. Now, let us try and understand what co-pay means, and what is its effect on the premium.

Consider a 80-20 co-pay clause with a $30 cap. Seems like Greek?

Let us break it up into its three parts. The components of the co-pay clause (and their effect on the premium) are as under.

  1. 80% would be what the insurance company pays. (The higher the % that the insurer pays, higher is your premium)
  2. 20% is what you (the insured) pay out of your pocket. (The higher the % that you pay, lower is your premium)
  3. $30 is the maximum limit of that 20% i.e. your share. (The higher the co-pay cap, lower is the premium)

Many people are confused by all this when they are looking at so many options before selecting a policy for their needs. It is necessary to understand the most important clauses of any policy before signing the dotted lines. Co-pay is one of the major clauses that determines how effectively you can use the benefits of a policy you are paying for. Be very careful when deciding on this clause.

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