Health Insurance 10% Co-Pay Rule may change how policyholders pay for hospitalisation from January 1, 2027, if a proposal being considered by the insurance industry receives regulatory approval.
Under the proposal, customers could have to bear 10% of the admissible claim amount.
The proposal is being discussed by non-life insurers through the General Insurance Council.
It is not a final rule yet and would require regulatory approval before it can be implemented.
Health Insurance 10% Co-Pay Rule Explained
Under the proposed arrangement, the policyholder would pay 10% of the admissible claim, while the insurer would cover the remaining 90%, subject to the terms and limits of the policy.
The customer’s contribution has been proposed to be capped at Rs 5 lakh per claim.
For example, if an admissible hospitalisation claim is Rs 5 lakh, a 10% co-payment would mean the policyholder contributes Rs 50,000, while the insurer pays Rs 4.5 lakh.
Importantly, the co-payment would apply to the admissible claim amount rather than automatically being calculated on the entire hospital bill.
Expenses excluded under the policy, applicable sub-limits and other non-payable items could still have to be paid separately by the customer.
Why Insurers Are Considering the Change
The proposed system could reduce insurers’ claim payouts and potentially help bring down health insurance premiums.
It is also intended to encourage greater cost awareness among customers and help address rising healthcare and claim costs.
However, lower premiums could come with higher expenses at the time of hospitalisation.
This means a policyholder could save on the premium but still need to arrange additional money when making a large claim.
Industry estimates cited in the report suggest that a 10% co-payment does not necessarily translate into a 10% reduction in premiums.
The potential reduction in insurers’ claims costs could vary depending on factors such as the policy design, claim mix and coverage limits.
How Cashless and Reimbursement Claims Could Change
The proposed co-payment would apply to both cashless and reimbursement claims.
In a cashless claim, the insurer would pay the eligible portion directly to the network hospital, while the policyholder would bear the co-payment and other expenses not covered by the policy.
In a reimbursement claim, the policyholder may initially pay the hospital and then submit the documents to the insurer.
The insurer would reimburse the admissible amount after applying the applicable co-payment.
This makes it important for customers to understand what their policy considers admissible before estimating how much they may need to pay from their own pocket.
What Policyholders Should Check
Before choosing or renewing a health insurance plan, customers should look beyond the headline premium and check the maximum amount they may have to pay during a major hospitalisation.
Policyholders should also examine disease- or treatment-specific sub-limits, non-payable expenses and deductibles. These costs can add to the co-payment and increase the total amount paid by the customer during a claim.
The availability of zero co-payment alternatives under a future mandatory framework is also yet to be clarified.
Insurers already offer products with different co-payment structures, but the final rules will determine whether customers can choose a higher-premium option with greater claim protection.
For now, the 10% co-payment is only a proposal under consideration.
Policyholders should wait for the final regulatory framework and product terms before assuming that the proposed change will apply to their existing or future policy.
