Deductible, in health insurance, is the amount which you agree to pay for your medical expenses before your insurance company pays for the same. In other words, a deductible is the concept of cost sharing between you and your insurance company for paying for your health care expenses.
Before we dive into deductibles, please understand that this concept differs from coinsurance & copay. Coinsurance refers to availing compensation from multiple policies, whereas copay is used to share the cost of covered expenses with your insurer.
Let's understand this with the help of an example:
Consider a hypothetical situation that you have opted for the following options while purchasing the health insurance policy:
SI (Sum Insured): INR 10 lakh
Deductible: INR 3 lakh
Now, if you file a claim for INR 4 lakh, the insurance company will not pay the complete claim amount. You will have to pay INR 3 lakh out of your pocket and the remaining INR 1 lakh will be paid by the insurance company. This is because you had opted for INR 3 lakh as the deductible amount.
Thus, it is best advised to have a detailed discussion with your general insurance company about the SI and deductible, before you purchase a health insurance policy.
Here are a few important things that you should know about deductibles:
- Deductible is applicable on a yearly basis for your health insurance policy.
- You can choose the deductible amount only on the top up health insurance plans like Extra Care Plus Policy. This is referred to as an aggregate deductible amount.
- The higher is the deductible amount, the lower is the premium cost. High deductible health insurance plans are also known as consumer-directed plans. You can decide the amount for the deductible, based on your medical history and body type. For instance, if you rarely fall ill, it might be better to opt for a health insurance plan with a higher deductible and lower premium.
- Deductible and copay are two different terms with different meanings. While deductible is the fixed amount you choose to pay for medical services, before your insurer starts paying for it, copay is the fixed percentage of the claim amount that you need to pay.
- Deductible does not reduce the SI (Sum Insured), it just reduces the premium amount.
Health Insurance is a service that looks after your finances in case of medical emergencies. It is best advised to get an insurance policy which fulfils to your requirements. Deductibles provide health insurance benefits such as lower premiums but health is more important than wealth, so choose your deductibles and the health insurance policy wisely.