Health Insurance Buyers May Have to Pay 10% of Hospital Bill Soon
Health insurance policyholders may soon bear 10% of hospital bills, as regulators consider a new cost-sharing approach aimed at controlling healthcare and insurance costs.
Health insurance buyers may soon have to pay 10% of their hospital bills under a proposed cost-sharing model.
Health Insurance: For years, the promise of a comprehensive health policy in India has been simple: get admitted, get treated, and let the insurer settle the bill. That promise could change for new buyers. Non-life insurers are considering a plan under which policyholders would pay 10% of every admissible hospitalisation claim on retail health policies from January 1, 2027, according to news reports. The patient’s share would stop at Rs 5 lakh per claim, and customers would get lower annual premiums in return.
The proposal is being examined by the General Insurance Council, the non-life industry’s coordinating body. It is not a regulation and has not been finalised. The co-payment would arrive as part of a package that also includes a common hospital empanelment system and a formal mechanism for resolving disputes between insurers and hospitals.
Health Insurance: What the Proposal Covers
The 10% share would apply to admissible inpatient hospitalisation expenses, including treatment that follows an accident. It would apply equally to claims settled through the cashless procedure and to those settled through reimbursement. Even a policyholder with a comprehensive plan would therefore need to keep funds ready for a medical emergency, because a part of every admissible bill would fall on the family.
The scheme would extend to retail indemnity products, retail policies issued under group arrangements, the indemnity components of combination products, internal migrations and portability business. Outpatient claims would remain outside its scope. The co-payment is also designed to be inflexible: it could not be waived, reduced or altered through riders or endorsements, and a policyholder could not recover the 10% from another health insurance policy.
For a sense of scale, a policyholder with an admissible claim of Rs 4 lakh would pay Rs 40,000 under the proposed structure, with the insurer bearing the balance. The Rs 5 lakh ceiling on the patient’s contribution is meant to limit exposure in the case of very large claims.
Also Read: IRDAI Wants Premium, Reinsurance and Claim Money to Skip the Middleman
Health Insurance: Why Insurers Say It Is Needed
The industry’s reasoning centres on how hospitals and patients behave when a bill is fully covered. Insurers believe that hospitals may order additional diagnostic tests, recommend further procedures and extend stays for patients with comprehensive cover. Higher-category rooms can also raise the total bill, since doctors’ fees and procedure charges are often linked to room tariffs. When insurance meets the entire amount, patients may have less reason to question charges or to pick a lower-cost hospital.
A council note links overbilling and provider-induced demand to a perception that insured patients are less sensitive to prices, which in turn inflates healthcare costs. The co-payment is intended to bring that sensitivity back, and the industry describes the move as an effort to correct cost distortions in healthcare.
Health Insurance: Separate Plans for New and Existing Customers
Under the proposal, insurers would refile their products in two variants. Fresh Customer Plans would carry the mandatory co-payment, while Renewal Customer Plans would not, preserving continuity for people who already hold policies. Product refiling and core IT changes must be completed by December 31, 2026, leaving insurers a little under three months to prepare their systems.
Health Insurance: How It Differs From Co-Pay Today
Co-payment is not new to Indian health insurance. The share is generally specified as a percentage of the claim amount, commonly between 10% and 30%, and such clauses are often mandatory for senior citizens above 60, while many insurers also offer voluntary options that lower premiums. What the proposal changes is the scope: instead of being tied to older customers or chosen by the buyer, a 10% share would become a standard feature for new retail customers across the industry.
The idea has parallels abroad. Indonesia introduced a rule under which policyholders bear part of their hospital bills, with a minimum 10% share of the claim and upper limits on the amount payable, aimed at curbing overclaims and rising medical costs. Indonesia’s financial services authority said at the time that the rule was meant to prevent moral hazard and overtreatment.
Health Insurance: Questions Raised Within the Industry
The proposal has drawn reservations. A health insurance expert who earlier headed operations at a general insurer said the choice between a cheaper policy with a deductible and a full-compensation policy should rest with the insured. People buy insurance to be indemnified for their costs, the expert said, and customers who pay a higher premium for a larger sum insured would be treated unfairly if they still had to bear part of the bill. The expert also said this could discourage people from buying high-value policies.
Competition law is another concern. An industry executive said that if insurers collectively decide that no one will offer a full-compensation policy, the arrangement could attract the attention of the Competition Commission.
Health Insurance – The Wider Regulatory Backdrop
The proposal comes as the cost of selling and servicing insurance is under separate scrutiny. On September 23, 2026, IRDAI released a consultation paper on distribution economics, which noted that retail health commissions through brokers averaged around 30% in FY2024-25. The regulator has invited feedback on those proposals until October 25, 2026. That exercise concerns commissions and is separate from the General Insurance Council’s co-payment proposal.
For now, the co-payment plan remains under consideration. Its final design, including whether the 10% rate, the Rs 5 lakh cap and the January 1, 2027 start date survive, will depend on the council’s decision and on any regulatory review that follows.
