Insurance & Claims
Co-pay (Co-payment)
A co-pay is a fixed percentage of each admissible health insurance claim that the insured person pays, with the insurer paying the rest.
What is a co-pay?
A co-pay, or co-payment, is a cost-sharing clause in a health insurance policy. It requires the insured person to bear a fixed percentage of every admissible claim amount, while the insurer pays the remainder.
For example, with a 10% co-pay on an admissible claim, the insured pays 10% and the insurer pays 90%. The percentage is defined in the policy and the co-pay applies to each claim, not only once a year.
A co-pay is different from a deductible, which is a fixed amount the insured must pay before the insurer starts paying.
Where co-pays commonly appear
- Parental cover in group policies, because claims for older members tend to be higher
- Specific treatments or conditions defined in the policy
- Treatment outside a defined network or in a higher-cost city zone, in some policies
- Senior citizen retail policies
Why it matters for employers
A co-pay lowers premiums because employees share part of the cost of claims. It can also discourage unnecessary hospitalisation. But it shifts real costs to employees, often at a difficult time.
When designing a group health insurance policy, employers weigh:
- How much premium a co-pay actually saves
- Who is affected (for example, only parents, or everyone)
- Whether employees can opt out of the co-pay by paying extra premium
- How the clause will be explained before employees need to claim
Unexpected co-pay deductions at discharge are a frequent source of frustration, so clear communication matters.
How co-pay interacts with other limits
The co-pay is usually applied to the admissible claim amount – that is, after other deductions such as sub-limits, room rent proportionate deductions and non-payable items. The exact order of calculation is defined in the policy wording, so check it with your insurer or broker.
Example
An employee's mother is hospitalised for pneumonia. The parental cover has a 20% co-pay. After the insurer removes non-payable items, the admissible amount is calculated, the insurer pays 80% of it, and the employee pays the remaining 20% plus non-payable items at discharge. Because HR had shared a simple explainer, the family knew to expect this.
Key takeaways
- A co-pay is the percentage of each admissible claim paid by the insured.
- It lowers premiums but increases what employees pay when they claim.
- It is common for parental cover in group policies.
- Design cover options transparently with our employee health benefits platform.