Lower premiums, higher out-of-pocket expenses: Experts decode the proposed 10% health insurance co-pay rule

Non-life insurers are considering a 10% co-payment on retail health insurance claims from 1 January 2027, with the policyholder’s contribution proposed to be capped at ₹5 lakh per claim. The proposal could lower annual premiums, but policyholders would have to arrange part of the hospitalisation cost themselves.

Retail health insurance means a health insurance policy that an individual or family buys directly from an insurer for themselves, rather than getting coverage through an employer or another group.

“The proposal, being considered by the General Insurance Council, would pair the change with common hospital empanelment and a formal mechanism for settling disputes between insurers and hospitals,” according to a report by The Times of India (TOI).

If implemented, even people with comprehensive health insurance would have to bear 10% of the in-patient hospitalisation cost, whether the claim is settled through a cashless facility or reimbursement.

The proposed co-payment cannot be waived, reduced or modified through riders or endorsements, and the policyholder’s contribution cannot be recovered from another health insurance policy, according to the report. Here is what it could mean for policyholders.

What is co-payment in health insurance?

A co-payment, or co-pay, refers to the 10% of a claim amount that the policyholder has to pay from their own pocket.

Deepika Reddy, Co-founder & Finance Director at Anvayaa, said, “It is being considered for retail indemnity health policies, retail-under-group policies, the indemnity portion of combination products, as well as policies coming through migration or portability. Outpatient claims are proposed to remain outside this arrangement.”

Indemnity health insurance reimburses eligible medical expenses up to the policy’s coverage limits. Migration refers to moving from one health insurance policy to another with the same insurer, while portability generally means shifting a policy from one insurer to another while retaining eligible continuity benefits.