What is Health Insurance Deductible?

A health insurance deductible is a fixed amount that you pay out of your pocket before your insurer pays for the medical expenses from the policy coverage. Think of it as the initial share or price you agree to pay whenever you raise a claim.

Deductibles are a type of cost-sharing in which you and your insurance company share the healthcare costs. Considering this, for the year, once you have paid your deductible amount, your insurance company starts paying a larger share of your medical bills.

For instance, if your total medical expenses are INR 40,000 and your health insurance deductible is INR 10,000. Then, to claim the insurance, first you need to pay INR 10,000, and the remaining amount, i.e., INR 30,000, will be covered by the company.

However, if the medical expenses are less than the health insurance deductible, the insurance company will not pay the amount. Additionally, you can claim a tax deduction under Section 80D of the Income Tax Act, 1961 on your paid medical insurance premium.

Different Types of Health Insurance Deductible

Not all health insurance deductibles work in the same way. Depending on the plan structure, the Indian health insurers offer different types of health insurance deductibles. These are as follows:

• Compulsory Deductible: It is a mandatory deductible, fixed by the insurer. Additionally, the policyholder cannot change it. The initial amount in it should be paid before the insurer pays the remaining amount.
• Voluntary Deductible: This allows you to choose how much you need to pay from your pocket before your insurance kicks in. The higher your deductible, the lower your monthly insurance premium.
• Comprehensive Deductible: This applies to the whole policy and includes all healthcare services stated in the plan under one combined limit.
• Non-Comprehensive Deductible: This health insurance deductible applies to certain services only. It includes hospitalization, outpatient treatment, or room rent.
• Cumulative Deductible: If no claim is made, this health insurance deductible increases every year. It helps insures to manage risk, but over time increases your share.

Benefits of Choosing a Deductible Policy

Deductible-based health insurance policies provide several benefits, specifically for people looking for comprehensive coverage at competitive prices.

• When opting for a deductible health insurance policy, you pay lower premiums. It is beneficial for young policyholders, families with low medical expenses, and people with existing corporate insurance.
• It is ideal for covering big medical events. It eliminates small medical claims and ensures your insurance helps during major illnesses or hospitalizations.
• At low premiums, these offer high-value health coverage.
• It further encourages responsible healthcare usage. Additionally, as you bear the initial cost, you become more mindful of unnecessary hospitalizations and medical tests.
• Under a voluntary deductible, you have the freedom to customize your premium amount and share of expenses.

What Decides the Health Insurance Deductible Amount?

The health insurance deductible amount is influenced by several factors. It includes:

• Age
• Premium Amount
• Health Status
• Policy Type