On a ₹5 Lakh Hospital Bill, ₹50,000 Would Be Yours: Insurers Weigh Compulsory 10% Co-Pay From 2027
Hospital Bill may no longer be fully covered as insurers weigh a compulsory 10% co-pay from 2027. Here’s what the proposed change could mean for health insurance customers.
New India Assurance has been ordered to pay Rs 8.06 crore over a fire insurance claim involving Victorinox India.
Hospital Bill: A family handed a ₹5 lakh hospital bill would pay ₹50,000 of it themselves, even if the policy covers the treatment, even if the hospital is cashless, and even if they bought the highest cover on offer. That is the arithmetic of a proposal now before India’s general insurers, who are weighing a flat 10% patient contribution on admissible hospitalisation claims from January 1, 2027.
As per the news reports, the proposal is being considered by the General Insurance Council (GIC), the industry body of non-life insurers. It has not been finalised, and policyholders would get lower annual premiums in return.
Hospital Bill: What the proposal would change
Under the draft terms, the 10% share would apply to all admissible inpatient hospitalisation costs, including treatment after accidents. The policyholder’s contribution would be capped at ₹5 lakh per claim. Because 10% of a ₹50 lakh bill is ₹5 lakh, the cap would only come into play for the very largest claims.
The rule would apply whether a claim is settled cashless or by reimbursement. Outpatient (OPD) claims would stay outside the scheme.
The proposal would cover retail indemnity products, retail policies sold under group arrangements, the indemnity portion of combination products, and policies that move between insurers through internal migration or portability. It also closes the usual routes around a co-payment: the share could not be waived, reduced or altered through riders or endorsements, and the 10% could not be recovered from another health policy held by the same person.
As per the news reports, the thinking behind the plan is that comprehensive cover can encourage longer stays and extra tests or procedures, and that higher room categories lift bills because doctors’ fees and procedure charges are often linked to the room tariff. Co-payments already exist in India, but mostly as a voluntary option taken for a cheaper premium or as a condition on some senior-citizen plans. A blanket, non-waivable version across retail products would be a different arrangement.
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Hospital Bill: Why insurers say costs are the issue
The co-payment idea follows a run of industry moves aimed at hospital costs. In late July, the GIC issued an advisory on admission criteria for fever and infectious diseases, drawing on guidelines from the Indian Council of Medical Research, the Health Ministry and the National Vector Control Programme. Healthcare providers and hospital administrators voiced concern that insurers could use it to reject claims. On August 3, the council defended the framework, saying it was not meant to curb clinical autonomy and that doctors could still admit patients when justified, with documentation.
S Prakash, who heads health insurance ecosystem and strategic partnerships at the GIC, said at the time that the advisory responded to a rise in avoidable admissions. The council put claims settled by insurers at ₹94,247.6 crore in 2024-25, with cashless admissions making up 66.4% of volume.
The proposed co-payment would sit alongside a larger project: common empanelment, under which a hospital signs one agreement to join the networks of multiple insurers. The insurance regulator IRDAI pushed insurers in a January 2025 circular to build a common hospital panel and negotiate package rates modelled on the government’s Ayushman Bharat scheme, noting that hospital charges under private health insurance are not standardised.
Around 2,000 hospitals had joined the platform in FY26, with a target of 5,000 by the end of FY27 and over 10,000 applications received. Several large private hospital chains opposed the framework last year, citing tariff clarity and the lack of a way to contest short payments. The new proposal would add a formal mechanism for settling disputes between insurers and hospitals.
Hospital Bill – Concerns, evidence and what happens next
Reaction has centred on fairness and competition. Shreeraj Deshpande, a health insurance expert who previously ran operations at a general insurer, said buyers should be free to choose between a cheaper policy with a deductible and a full-cover policy, and that making customers who pay higher premiums for larger sums insured share costs anyway could discourage them from buying high-value cover. Competition concerns have also surfaced, since a mandatory, industry-wide condition would apply across insurers at once.
Critics also point to the scale of typical claims. A 2023 study of reimbursement claims put the average claim at about ₹42,000, with 15% of claims above ₹1 lakh. IRDAI’s annual report for 2023-24 recorded an average payout of ₹31,086 per claim across about 3.26 crore claims. On bills of that size, a 10% share would be a few thousand rupees, but would fall on every claim rather than only on large ones.
Research on cost-sharing offers a mixed picture. The RAND Health Insurance Experiment, a US study run between 1974 and 1982, found that participants who paid part of their costs made fewer doctor visits and had about 20% fewer hospitalisations than those with free care. It also found that cost-sharing reduced both effective and less effective care in roughly equal measure, and that the sickest and poorest participants fared worse on some health measures.
For now, the plan remains a proposal. No final decision, premium discount or implementation circular has been published, and no formal response from IRDAI to the co-payment idea has been made public so far. Any change to health product terms would ordinarily need to fit within the regulator’s product rules, so policyholders can expect to see clarity on both the premium reduction and the date through insurer notifications or an IRDAI communication if the proposal advances.
