A major discussion is currently taking place within India’s General Insurance Industry that could significantly change the way policyholders pay for hospitalization.

According to recent reports, non-life insurers are considering a proposed 10% co-payment on retail health insurance claims, with the policyholder’s contribution reportedly capped at Rs 5 lakh per claim. The proposal is being discussed through the General Insurance Council and has been reported as potentially coming into effect from 1st January 2027, if approved and implemented by IRDAI. But there is one very important point,

“This is a proposal under consideration, not a confirmed IRDAI rule as of 6th October 2026.” Therefore, the policyholders should not assume that every health insurance policy will automatically have a 10% co-payment from 1st January 2027.

What is the Proposed 10% Health Insurance Co-Pay?
A co-payment or a co-pay means that the insured person bears a specified percentage of the admissible claim while the insurer pays the balance. IRDAI itself defines co-payment as a cost sharing requirement where the policyholder bears a specified percentage of the admissible claim amount. A Co-Payment does not reduce the sum insured.

Under the proposal currently being reported, a policyholder could potentially be required to bear,

· A 10% of the admissible hospitalization claim
· While the insurer would pay the remaining 90%, subject to the policy terms

The reported maximum contribution of the policyholder would be Rs 5 Lakh per claim

The proposal has been reported in connection with retail indemnity health policies and certain other categories, including retail under group policies.

Is the 10% Co-Pay Rule Confirmed?
NO. This is the most important fact consumers need to understand. As of 6th October 2026, 10% co-payment is being reported as a proposal / discussion, and not a final regulation applicable to all health insurance policies.

Therefore, the final decision, scope, effective date and actual policy wordings, if the proposal proceeds, must be determined by the applicable regulatory / product framework.

How Would a 10% Co-Pay Affect Your Health Insurance Claim?
This is where the proposal becomes important for consumers. Suppose you have a health insurance policy with a Rs 10 lakh sum insured, and you have an admissible hospitalization claim of Rs 5 lakh.

Under the proposed 10% co-payment, 

So even though you have a health insurance policy, you could have to arrange Rs 45,000/- from your own pocket for that claim, apart from the health insurance premium payment you have done for the health insurance policy, but there is another important point.

The 10% is reportedly calculated on the admissible claim, not necessarily on the total hospital bill. As per the above example, suppose the hospital generates a bill of Rs 5,00,000/- but after applying policy terms, the insurer determines that only Rs 4,50,000/- is admissible.

Then the proposed 10% co-payment would generally be calculated on the admissible amount

· 10% of Rs 4,50,000 = Rs 45,000/-
· The remaining non-payable expense would be separate

Therefore, 10% co-pay does not mean that your total out of pocket expense will always be exactly 10% of your hospital bill. This is one of the most important points consumers need to understand.

Room rent limits, sub-limits, deductibles, exclusions, non-payable expenses and proportionate deductions can increase the actual amount paid by the policyholder beyond the co-payment itself.

The Rs 5 Lakh Cap – How Does It Actually Work?
The reported cap is Rs 5 Lakh per claim. At 10% co-payment, the cap becomes relevant when the admissible claim reaches Rs 50 Lakh because

· 10% of Rs 50 Lakh = Rs 5 Lakh

So the proposed Rs 5 lakh capping does not mean that everyone will pay only Rs 5 Lakh. For claims below Rs 50 lakh, the reported mechanism would definitely remain 10% of the admissible claim.

Can 10% Co-Pay get Removed Through a Rider or Endorsement?
According to the reporting on the proposal, the proposed co-payment would not be waivable, reducible or can be modified through a rider or endorsement. In other words, if this framework is ultimately adopted in the reported form, a policyholder may not simply purchase an additional rider to eliminate the mandatory 10% co-pay.

Can Another Health Insurance Policy Pay Your 10% Co-Pay?
This is another important area. Reports on the proposal state that the policyholder’s 10% co-pay contribution cannot be recovered from another health insurance policy. However, consumers should not confuse this proposal arrangement with the existing IRDAI framework for multiple indemnity health insurance policies.

What Problems Could a Mandatory 10% Co-Pay Create?

a) Higher Emergency Cash Requirement
A person may have a Rs 20 Lakh admissible claim and will need to arrange approximately Rs 2 lakh under the reported model. For someone without adequate emergency savings, this could become difficult.

b) High Sum Insured May create a False sense of Complete Protection
Consumers often believe “I have Rs 50 lakh insurance, therefore my entire hospital bill is covered.” Insurance has never worked like this. But a mandatory co-payment would make this distinction even more important.

c) Out of Protect Costs Could be more than 10%
This is the most crucial point. If a hospital bill = Rs 8 Lakh, but because of

· Non-Payable Items
· Room Rent Limits
· Sub-limits
· Deductibles
· Exclusions
· Proportional Deductions

Only Rs 6 Lakh is admissible. The 10% co-payment on Rs 6 Lakh would be Rs 60,000 but the insured’s total out-of-pocket expenses could be more than Rs 60,000, because non-payable expenses and other policy deductions may also have to be borne separately.

d) Senior Citizens Could be sensitive to change
Healthcare utilization generally increases with age. A Rs 1 lakh or Rs 2 lakh co-payment may be manageable for some younger policyholders with strong cash reserve but for a senior citizen, facing a large hospitalization expense, even a percentage-based contribution can become financially significant.

e) High Value Health Insurance Policies could become More Difficult to evaluate
A person buying Rs 50 lakh or Rs 1 Crore health insurance policy is often specifically trying to protect against catastrophic medical expenses. If a mandatory 10% co-payment applies, the insured needs to keep aside potential cash reserves with them, even after having a large sum insured.

What should Existing Health Insurance Policyholders Do?
Do not panic. If you already have a health insurance policy, do no cancel your existing policy because of a news report about a proposal. Your current policy continues to be governed by its applicable policy terms and the regulatory framework in force.

Make sure that you,

· Continue your policy without a break
· Do not surrender an old policy simply because of this news
· Keep your policy documents and Customer Information Sheet (CIS) with you
· Check your Existing Co-payment, deductible and sub-limits
· Wait for confirmed regulatory / product information before making a major change

What should someone Do If they Don’t have Health Insurance
If you do not have adequate health insurance, do not postpone buying health insurance merely because the regulatory position is doubtful. Waiting Periods, Pre-Existing Disease provisions and future insurability can be much more important than trying to time a possible rule change.

Make sure, that you don’t make the mistake of comparing insurance policy based on premiums only.

Frequently Asked Questions

a) Is 10% Co-Payment Mandatory in Health Insurance From 1st January 2027?
No, not at present. It is a proposal being discussed by the non-life insurance industry and the General Insurance Council. It has not become a universal confirmed IRDAI Requirements.

b) Will Premiums Become 10% Cheaper?
No such guarantee exists. The proposal may potentially reduce premiums, but the actual reduction has not been announced and would depend on product design and other factors.

c) Should I Cancel my Existing Health Insurance Policy?
No. Do not cancel an existing policy because of this proposal. Maintain continuity and wait for confirmed regulatory approval and product information.

IMPORTANT – The 10% Co-payment discussed in this article is proposed and under consideration as of now and is not confirmed by IRDAI rule as of 6th October 2026. The final applicability, effective date, scope and policy terms and conditions may change. Readers should reply on the final regulatory notification and press release and their insurer’s policy document before making any decision.

Article Reference
Health insurance may get cheaper but your hospital bill could get costlier: What a 10% co-pay means for policyholders by MoneyControl

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

Insurance companies want policyholders to pay 10% of health claims by The Times Of India

INSURANCE AWARENESS > INSURANCE IGNORANCE
Helping individuals and families make informed insurance decisions through education, transparency, and awareness.

Last Updated – 08/10/2026
Author Name - Abhishek Borkar

Disclaimer
This article is intended solely for information and educational and awareness purposes and should not be considered financial, legal, tax, investment, or insurance advice.

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