What Are Deductibles In Health Insurance Policy In India?
A health insurance policy is no longer a bizarre word these days. People know its importance and work process and thus, they are enjoying the benefits of a health insurance policy. But it is an uphill task to understand different associated terms of a health insurance policy. These components play a pivotal role in your health insurance policy, so, you must be aware of these terms. In health insurance, sometimes, you and your health insurer need to share the costs of healthcare expenses at the time of hospitalization. Deductibles in health insurance policies are the amount that you need to pay from your side while raising a claim for your treatment. To understand more about insurance deductibles, you must check your health plans thoroughly.
In this article, we are going to discuss more information regarding medical deductions and how medical insurance deductibles strengthen your health plan.
What is Deductible?
Health insurance deductible meaning is the amount you need to pay from your side before initiating a claim amount to your insurer. Once your claim amount exceeds the health care deductible amount, your health insurance company is bound to pay the claim amount. The prime advantage of deductible is that the higher the deductible, the lower will be your premium amount. Let’s understand what is deductible in health insurance with an example.
If your raised claim amount is Rs. 1,50,000 and your policy’s deductible amount is Rs. 10,000, then you need to pay Rs. 10,000 from your pocket, while the remaining amount (Rs. 1,40,000) will be paid by your health insurer.
How do Healthcare Deductibles Work?
Deductibles in a health insurance policy will act as a hindrance from initiating small and irrelevant claims. Though your health insurance premium can be low, the deductible may be on the higher side. This safeguards you from losing out on your No Claim Bonus (NCB). So, you should only raise a claim if your expenditures are high. Since you need to clear off the deductible before your health insurer covers the remaining sum insured, all extraneous claims will be discarded. The insurance company will only cover the rightful claims from customers.
Types of Deductibles in Health Insurance
Let’s take a look at various types of deductibles in health insurance policies:
- Compulsory Deductible
This mandatory deductible is regulated by the health insurance provider. Every time the policyholder initiates a claim, he/she needs to pay the compulsory deductible amount. For example, if your compulsory deductible is Rs. 15,000 and your expenses are Rs. 50,000, then you need to pay Rs. 15,000 from your side. In this case, the remaining amount will be paid by your health insurer. This could be in the form of a percentage of the sum insured.
- Voluntary Deductible
This type of deductible is voluntary and a policyholder may or may not choose it. If you opt for a higher deductible, your premium will be reduced drastically. This is beneficial if the policyholder does not have a persistent illness and may not need financial support from the insurance company. For example, if you choose for a voluntary deductible of Rs. 1 lakh and you raised a claim of Rs. 2 lakhs, then you need to pay Rs. 1 lakh from your pocket and the rest Rs.1 lakh will be paid by your insurance company. Policyholders who don’t need to initiate frequent claims and are not interested to pay higher premium amounts can opt for this type of deductible.
Benefits of Deductibles in Health Insurance
The primary benefits of deductibles are:
- They reduce your health insurance premium amount. Some insurance companies also offer discounts if you choose voluntary deductibles.
- They deter you from initiating minor claims, this means you won’t lose your No Claim Bonus. This will enhance the coverage of your base health plan.
- You can avail of the coverage of the policy under any medical emergencies or untoward hospitalization despite applicable deductibles.
Disadvantages of Deductibles in Health Insurance
Though deductibles have many advantages, they also come up with some disadvantages that you should be aware of.
- You need to bear your healthcare expenditures to some extent. This could be difficult if you don’t have any permanent income resources. For a compulsory deductible, your insurer will only pay you once you pay your portion.
- If you opt for a higher deductible, you need to pay from your pocket. This can drain out your savings, in case of multiple healthcare emergencies.
A health insurance policy safeguards your finances in case of medical emergencies. If you can pay a higher amount from your side while initiating the claim, you can go for a higher deductible. But if your financial status is not stable and you want your insurer to cover most of your healthcare expenses, then you can go for a lower deductible plan. You should prudently choose the deductible amount only after evaluating your insurance needs, possible healthcare expenses, and affordability. We assume you already know how health insurance works in India and now you are also aware of how healthcare deductibles work?
How do you calculate your deductible?
The deductible is the amount that a policyholder needs to pay from his/her side before the insurer starts the reimbursement. An insurance company will reimburse your payment when it exceeds the deductible. If you initiate a claim of Rs. 1, 50,000 against your health insurance policy and your policy’s deductible amount is Rs. 50,000, then you need to Rs. 50,000 while the remaining amount ( Rs. 1,00,000) will be paid by the health insurance company.
What are the types of deductibles?
1. Compulsory deductible: this is the mandatory amount that is governed by the insurer. Before initiating a claim, every policyholder needs to pay this compulsory deductible amount.
2. Voluntary deductible: This deductible is optional and a policyholder may/may not choose it. If you choose a higher deductible amount, your premiums will be reduced.
3. Comprehensive Deductible: This single deductible amount keeps adding until you pay up the entire amount towards your health insurer.
4. Non-Comprehensive Deductible: This type of deductible is valid only on certain covers and not the entire policy.
5. Cumulative Deductible: This type of deductible comes under a family floater policy. The insurer applies deductibles to all family members who have to pay the total deductible. Then, only the insurer will pay the remaining claim amount.
Who pays the deductible in health insurance?
Deductibles are paid by policyholders before insurance companies start paying for claims.