Health Insurance Rules: 10% Co-Payment From 2027? Check What Changes

Health insurance rules could see a major change from January 1, 2027, if a proposal to introduce a 10% co-payment on retail health insurance policies is implemented. The General Insurance Council is reportedly examining the proposal, under which policyholders would pay 10% of the approved claim amount while the insurer would cover the remaining 90%. However, the proposed co-payment could be capped at Rs 5 lakh per claim. Here’s how the rule could affect your medical expenses and health insurance planning.

What Is the Proposed 10% Co-Payment Rule?

Under the proposal, policyholders may have to bear 10% of the eligible claim amount from their own pocket. The insurance company would then pay the remaining 90% according to the terms and conditions of the policy.

For example, if an approved claim is worth Rs 5 lakh, a 10% co-payment would mean you pay Rs 50,000, while the insurer pays Rs 4.5 lakh.

The proposed limit of Rs 5 lakh per claim is another important factor to consider, particularly for people facing expensive hospitalisation or major medical procedures.

Co-Payment Will Apply to the Approved Claim

One of the most important points is that the proposed 10% co-payment would be calculated on the approved claim amount, rather than automatically applying to the entire hospital bill.

Suppose your hospital bill is Rs 5 lakh, but your health insurance policy approves only Rs 4 lakh. In that case, the 10% co-payment would be calculated on Rs 4 lakh.

You would therefore pay:

• Rs 40,000 as the 10% co-payment
• Rs 1 lakh for expenses not covered by the policy

This means your actual out-of-pocket expense could be considerably higher than the co-payment alone.

How Will Cashless and Reimbursement Claims Work?

The proposed co-payment could apply to both cashless and reimbursement health insurance claims.

For instance, if you have an approved claim of Rs 3 lakh, you would contribute Rs 30,000, while the insurer would cover Rs 2.7 lakh, subject to the policy terms.

In a cashless claim, the insurer generally settles its eligible share directly with the hospital, while you pay your portion and any other non-covered expenses.

In a reimbursement claim, you may have to pay the hospital initially and later receive the eligible amount from the insurer after the claim is processed.

Could Lower Premiums Mean Higher Out-of-Pocket Costs?

A major reason to pay attention to the proposed change is the possible trade-off between premiums and medical expenses.

A policy with co-payment could potentially have a lower premium, but the saving at the time of buying the policy may translate into a larger personal expense when you make a claim.

However, a 10% co-payment does not necessarily mean a 10% reduction in premiums. Experts suggest that the actual premium saving could typically be around 4% to 7%, although the final impact may vary depending on the policy and the customer.

Can You Avoid the 10% Co-Payment?

It is not yet clear whether policyholders will have the option to choose a plan without the proposed co-payment by paying a higher premium.

Therefore, customers should not select a health insurance policy simply because it offers a lower premium. The overall cost of the policy should be assessed, including the amount that may have to be paid during a medical emergency.

What Should You Check Before Buying Health Insurance?

Before purchasing or renewing a health insurance policy, look beyond the premium and carefully check the policy conditions.

Pay particular attention to:

• Co-payment: Check how much of an approved claim you must pay yourself.
• Out-of-pocket expenses: Understand the maximum amount you could have to spend during treatment.
• Sub-limits: Check whether specific illnesses, procedures or hospital expenses have separate limits.
• Exclusions: Know which treatments and expenses are not covered.
• Deductibles: Find out whether you have to pay a fixed amount before the insurer starts covering the eligible expenses.
• Sum insured: Make sure the coverage is adequate for the medical costs you may realistically face.

Health Insurance Buyers Should Look Beyond Premiums

The proposed 10% co-payment requirement highlights why choosing health insurance based solely on the lowest premium can be risky. A cheaper policy may not necessarily offer the best financial protection when you actually need medical treatment.

If the proposal comes into effect, policyholders will need to understand exactly how co-payment, exclusions, sub-limits and other out-of-pocket expenses work before choosing a plan. Since the proposal is still under consideration, customers should also check the final terms and official policy details before making decisions about their health insurance coverage.