10% Health Insurance Co-pay under Consideration: Know What it Means

• Dushyant Sharma
• 09 Oct 2026
• 67 Views

India’s representative body for non-life insurers General Insurance Council (GIC) is currently considering a proposal to introduce a mandatory 10% co-payment in retail health insurance policies, with policyholder's contribution potentially capped at Rs. 5 lakh for each claim. The aim of GIC’s latest proposal is to address escalating medical expenses as well as potential distortions in hospital billing. 

However, if this proposal gets implemented, it could raise out-of-pocket expenses for health insurance policyholders, especially for those facing significant hospitalization costs. In addition, the proposed co-payment is reportedly being considered for retail indemnity health insurance products regardless of whether claims are settled through cashless treatment or through the means of reimbursement. 

What is Meant by “Co-Payment in Health Insurance”?

In context of health insurance, co-payment refers to a cost-sharing arrangement wherein a policyholder agrees to pay a specified percentage of an eligible medical claim while the insurer covers rest of claim amount. 

In case of a voluntary co-pay arrangement, the percentage is usually decided when the policy is bought or renewed. For example, with a 10% co-pay, if eligible hospitalization claim amounts to Rs. 5 lakh, then policyholder would need to pay Rs. 50,000 while the insurer would need to cover remaining Rs. 4.5 lakh. 

Opting for a higher co-pay could lead to a lower premium. This would make it appealing for policyholders with adequate savings who anticipate relatively low claim frequency. However, it is important to note that a lower premium does not necessarily indicate that the policy is less expensive overall. In case of significant hospitalization, policyholder may face substantial out-of-pocket expenses.

Key Highlights: Proposal for Mandatory Co-Payment

Here are some key points to note regarding GIC’s proposal for mandatory co-payment:-

Why is Mandatory Co-Pay Under Consideration?

Reportedly, GIC’s proposal for implementation of co-pay is intended to address increasing healthcare expenses and concerns about unnecessary or additional procedures being recommended to patients having comprehensive insurance coverage.

Under proposed plan, the co-payment would become applicable to all retail indemnity products and could not be removed or reduced through riders or add-on coverages. Additionally, the policyholder's share could not be reimbursed through another health insurance policy.

While insurers may see cost-sharing as a way to discourage unnecessary healthcare spending, this proposal could result in an increase in financial burden on individuals who have already paid higher premiums for comprehensive health coverage. If proposal gets implemented, its impact could be particularly significant in cases that involve large hospitalization bills, especially those arising from accidents. 

Mandatory Co-Payment Could Have a Greater Impact on Senior Citizens 

Mandatory co-payments, if implemented, could have a significant impact on senior citizens. This is because health insurance premiums typically rise with age. Many health insurance policies designed specifically for seniors already include an inherent co-payment, especially for policies purchased after the age of 60 or for individuals with pre-existing medical conditions. These policies may also come with additional restrictions like treatment-specific exclusions, claim limits and higher co-payments for certain pre-existing conditions. 

Policyholder’s expenses could be further increased by room rent limits. In case a policy restricts the amount payable towards room rent and the insured opts for a room above the permissible limit, then in such a case, the additional expense may have to be borne by policyholder.

In a similar way, co-payment usually applies to covered medical expenses while non-medical expenses such as certain consumables and administrative fees typically fall outside the policy’s coverage. If a mandatory co-payment is introduced, senior citizens, individuals with chronic illnesses and those requiring frequent medical treatment should be prepared for additional payments with each claim. 

Understanding Zone-Based Co-Payment, Voluntary Co-Payment and Deductibles

Health insurance policies may include zone-based co-payment clauses. Insurers often classify cities and regions into different zones based on costs of healthcare and they price their policies accordingly. If treatment occurs in a higher-cost zone than one used to calculate premium, an additional co-payment may be required under certain policies. 

This is distinct from voluntary co-payment, which is selected by policyholder to lower the premium. It's also important to note that co-payment and deductible are not one and the same. A deductible is another form of cost-sharing but it functions differently from co-payment. 

With a deductible, the policyholder agrees to pay a fixed amount for a claim before the insurer begins coverage. Deductibles can help to reduce premiums and discourage small claims. 

Source:- LiveMint