Deductible refers to the amount an insured person pays out of pocket. The remaining extra amount is borne by the insurance company. This amount is given as a percentage or proportion of the medical or hospitalisation expenses incurred and is pre-fixed by the insurance provider. Deductible in health insurance reduces the insurance risk.
This post discusses what is deductible in health insurance with an example, types, benefits, disadvantages and how to choose a deductible while buying a health insurance plan. Read on!
Let’s understand what is deductible in health insurance with an example.
Suppose a policyholder undergoes medical treatment, leading him to incur a bill of Rs. 50,000. He decides to raise a claim for his expenses. However, he agrees to pay a deductible of Rs. 10,000. In such a scenario, the remaining amount (Rs. 50,000 – Rs. 10,000 = Rs. 40,000) will be paid by the insurance company.
Note that if the expenses are less than the healthcare deductible amount, one cannot raise a claim for his/her treatment. For instance, Rohit receives minor treatment from a hospital which costs him Rs. 10,000. As per his insurance policy, the deductible amount is Rs. 15,000. In such a case, he will not be able to raise a claim and pay the entire amount from his pocket.
To avoid bearing a substantial amount as deductible, policyholders should file a claim only in case of higher medical expenses. This will help an applicant benefit from the plan by obtaining the No Claim Bonus. In this way, insurance companies ensure rightful and genuine claims only.
There are various types of healthcare deductibles in health insurance offered in both Indian and international markets. They are as follows:
This is a mandatory amount policyholders need to pay every time they raise a claim. For instance, if Rohit’s insurance policy levies a health insurance deductible of Rs. 12,000, and he undergoes a treatment worth Rs. 40,000, he will need to pay this deductible upfront during claim processes.
Members who do not regularly raise claims and look for ways to bring down the insurance premiums can opt for this. In this type, policyholders need to bear a higher deductible, as per their wish, which reduces their premium effectively. Ideally, individuals who are not suffering from a prolonged illness or do not require financial assistance from an insurer can opt for this.
Currently not available in Indian markets, this type of deductible keeps on adding until a member pays the entire deductible amount agreed upon towards a health insurance plan.
This type of deductible is applicable to selective coverages or medical expenses and not the entire policy. In this case, a member might need to pay for his/her medical expenses before the insurer pays up.
Essentially crafted for a family floater plan, this deductible applies to all family members. After payment of the deductible amount, insurers will settle the claim.
It is crucial to check for the deductible option available under a health insurance policy before opting for it.
Applicants need not be confused about deductible meaning in medical billing if they consider the above factors beforehand.
Here are some primary benefits of deductibles in health insurance plans:
With ample knowledge about the benefits of a health insurance deductible, you can now download the Navi app and purchase the policy within minutes.
Although deductibles in medical insurance reduce the premium amount, it could come with certain disadvantages too, some of which are mentioned as follows:
However, with proper planning and consideration, one can curtail their deductible amount and avail of medical services without hesitation.
One needs to follow the given points before choosing a deductible:
Now that you know the health insurance deductible meaning, making a sound decision regarding insurance will be easier. Furthermore, understanding the working of deductibles and their types can be a good start for first-time insurance buyers.
Additionally, members should consider the aforementioned factors before choosing a health insurance deductible to obtain maximum benefits. Also, knowing the criteria affecting deductible calculation can help them reduce financial pressure that might occur due to a high deductible plan.
Ans: Insured individuals choose a deductible amount while purchasing a health plan that he/she must pay while raising a claim. In case the insured individual fails to pay this amount, the company would not pay the claim.
Ans: Higher deductibles have lower premiums. And, lower deductibles have higher premiums. A lower deductible, however, cushions you financially during a medical emergency, as most of the amount is paid through claim settlement. A higher deductible reduces the chances of insurance claim approval.
Ans: Deductibles in top-up health insurance policies are the amount over which a particular health insurance plan gets triggered. Therefore, a claim amount below the deductible amount must be paid out of its own resources or through a regular health insurance policy.
Ans: Policyholders need to pay a fixed amount (percentage of the total treatment cost) towards their medical expenses, and an insurer pays the rest. This fixed amount is also known as co-pay. It applies to specific medical services.
Alternatively, deductibles are the amount an insured person must bear before claiming benefits from the insurer. It is therefore applicable before the insurer settles claims.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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