Co-payment vs deductible: Know all details of these health insurance options

• Follow

Nowadays, a health insurance plan is not a choice but a necessity. It provides financial back-up at times of medical emergency. The government is also giving tax benefits to promote health insurance among the common people. When it comes to purchasing health insurance, all should be aware of certain terms that may often be confusing. Co-payment and deductible re commonly used terms that are types of cost-sharing options in health insurance. It means part of your health care expenses have to be paid by you and another part will be paid by the insurer.

But there is considerable difference between the co-payment and deductible. They differ in when and how much you are supposed to pay, as well as what is left over for your insurer to pay.

Co-payment

Co-payment is a health insurance component wherein the payment of a percentage of the claim amount is to be paid by the policyholder. This agreement takes place between policyholder and the insurance company.

Deductible

Deductible is a fixed sum of money that policyholders are required to pay before their insurance policy starts contributing to their medical treatment. The term for paying deductibles is decided by the insurance provider – whether it is per year or per treatment.

Co-payment vs deductible

— Co-payment is a pre-defined amount that you have to pay each time you seek health care service. Co-payments typically vary for different services within the same plans. On the other hand, a deductible is a fixed amount. You have to pay this amount every year before your health insurance kicks in.

— A deductible is an annual process. After you meet with the deductible for the year, you do not have to pay anything until the next year. On the other hand, co-payment is an on-going process. You keep making co-payments every time you seek health care service.

Bottom line

So, before buying any health insurance plan, it is important for you to understand and compare the terms and conditions carefully. Then choose a co-payment or deductible option that is best suitable for you.