Non-life insurers are considering a new 10% co-payment rule for retail health insurance policies from Jan. 1, 2027. Under the proposal, policyholders would pay 10% of eligible hospitalisation expenses, while the insurer would cover the remaining 90%. The patient's contribution would be capped at Rs 5 lakh per claim, according to a report.
In return, insurance premiums may become cheaper for policyholders as they would be needed to pay lesser premium value. The Times of India report added that the rule would apply to hospitalisation costs, including accident-related treatment. It would be applicable for both cashless or reimbursement systems. The proposal also includes common hospital empanelment and a formal system to resolve disputes between insurers and hospitals.
What Does It May Mean For Policyholders?
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If the rule comes into effect, health insurance premiums may become cheaper. However, policyholders would still need to keep money aside for medical emergencies.
Under the proposed system, they would have to pay 10% of eligible inpatient hospitalisation expenses themselves. This means that even people with comprehensive health insurance could face significant out-of-pocket costs when they are hospitalised. This makes emergency savings important despite having insurance coverage.
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Under the existing structure, most insurers already provide co-pay options in return of lower premiums. Still, many people choose out of co-payment to ensure that they have greater financial protection during medical emergencies. It is already recommended to save three to six months of expenses as an emergency fund. If the proposed 10% co-payment is introduced, policyholders may need to reassess their financial planning to ensure they can manage medical expenses without financial stress.
As per the TOI report, the proposal would cover retail indemnity policies, retail-under-group policies, indemnity portions of combined products, internal migrations and portability. Outpatient claims would remain excluded. The 10% co-payment could not be waived or changed through riders or endorsements. The customer's 10% contribution cannot be recovered from another health insurance policy, the report added.
The proposal aims to control rising healthcare costs and reduce overbilling. The report noted that the insurers believe patients with full insurance coverage are less likely to question expensive tests, procedures, hospital stays or higher room charges. This can encourage hospitals to increase bills, leading to higher insurance costs. A 10% co-payment would make patients more cost-conscious.
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