Health insurance plays the role of financial backup, a security policy from any medical emergency. Buying a health insurance policy often confuses many people due to its broad terminology; one of them is deductibles.
What is the deductible for health insurance, and what is the deductible in India's health insurance are the most common questions asked by the policyholders to the insurers while buying the health insurance
Let us understand about the deductible in the article below.
What is the deductible for health insurance?
A deductible is a pre-decided fixed amount that a policyholder needs to pay to the insurance company before the insurer pays the policyholder for their claims. The insurer is accountable to pay the claim to the policyholder when the amount is over the deductible.
What is the deductible in health insurance in India?
There are three types of deductible in India - Compulsory Deductibles, Voluntary Deductibles, and Cumulative Deductibles.
What is deductible in health insurance, with example?
The insurance company’s fixed amount needs to be paid at the time of the event, and the balance amount needs to be paid by the policyholder.
For example, suppose the compulsory deductible amount is INR 25,000, and the hospitalization invoice is INR 75,000. The insurance company will pay INR 50,000, and the remaining amount of INR 25,000 needs to bear by the policyholder.
A voluntary deductible is made for those who don’t have any prolonged illness and do not regularly ask for the claims. The policyholder opts for a higher deductible amount by paying less premium.
For example, if the policyholder raises the medical claim for INR 50,000, then the policyholder needs to pay INR 25,000, and the insurance company will pay the rest INR 25,000.
A cumulative deductible is applied only for the family floater health insurance plan. A family floater plan health insurance protects the policyholder and the family under one plan. The total sum insured, and the health insurance premium will be shared among all family members. The family floater is the most beneficial plan in India because it covers the whole family instead of opting for a single health insurance plan for each member.
For example, if you are six members in the family and the family floater health insurance plan is INR 12 lakhs. In the case of a medical emergency, either one family member can use the entire INR 12 lacs amount, or all six members can use whatever amount they require staying within the limit of INR 12 lacs.
Shruti, a policyholder, asked Sanam, the insurer, about what is deductible in health insurance, with example. Once Sanam was done explaining to Shruti about her doubt, Sanam mistook the deductible with a copay. The difference between deductible and copay often confuses the common man.
Deductible vs. Copay
A deductible is a fixed amount the insured person needs to pay each year for the eligible medical services covered in the health insurance plan before the insurance company begins to share the covered services’ cost. The services can be bills for hospitalization, lab tests, surgery, CAT and MRI scans, medical devices, etc. Deductibles for individual coverage and family coverage are different.
is a sum amount that one needs to pay every time they fill a prescription or visit a doctor. Copay covers the portion of the medication or the cost of visiting a doctor. The insured person will be given a health card. For example, if you have a fever and you visited a doctor. The amount you pay at the doctor’s clinic is your Copay.
The policyholder will be responsible for any charges that are not covered in the health insurance policy plan.
Below are some frequently asked questions asked by a policyholder about deductibles in a health insurance policy:
1. Why is deductible mandatory in health insurance?
The deductible is mandatory because it protects the insurance company’s interest against any policyholders' random claims, thus reducing fraud. Also, it gives a sense of responsibility to the policyholder to use the health insurance policy claims wisely.
2. What is the amount of the deductible in the health insurance policies?
The amount of the deductible may differ from one health insurance company to another. A deductible is calculated based on the sum insured the policyholder has opted for. Read up on what is sum insured in health insurance
While choosing the health insurance policy plan, make sure to understand each policy’s advantages and disadvantages before paying the policy amount. Some plans have co-pay services at an extra cost, and it is suitable for those who need to visit a doctor more often.
For a nuclear family, choosing the policy with the cumulative deductible is the best option. Plans with lower premiums have higher deductibles. Similarly, plans with higher premiums have lower deductibles.