What is Deductible in Health Insurance? Tips to Choose the Right Plan

What is Deductible in Health Insurance

A deductible is the fixed amount you must pay out of pocket before your health insurer starts covering your medical bills. It’s your share of the cost. Once it's paid, the insurer handles the rest as per your policy terms. Choosing a deductible amount in health insurance can lower your premium but may increase upfront expenses.

Let’s say Ravi received a treatment bill of Rs 1 lakh with a deductible of Rs 10,000. He can make a claim request after paying the deductible amount, i.e. for Rs 90,000 (Rs 1,00,000-Rs 10,000). The deductible is applied to the aggregate of the claims as per the policy terms and conditions. Let us understand the working of a deductible elaborately.

How Does a Health Insurance Deductible Work?

Understanding the deductible amount in health insurance helps you choose a plan that balances your premium with potential out-of-pocket costs. Let us understand what is deductible in health insurance with an example:

>> Rahul purchased an individual health policy. He raised a claim of Rs 40,000. The health insurance deductible set by the company is Rs 10,000. In such a case, the company would bear Rs 40,000 – Rs 10,000 = Rs 30,000, and Rahul would pay a deductible from his pocket.

>> In another instance, he makes a claim worth Rs 10,000, and the deductible amount is Rs 15,000. Here, the insurer will not pay anything as it is liable to make payment only when the claim amount exceeds the deductible amount. With an aggregate deductible in health insurance, all individual expenses contribute toward a single annual deductible limit. There is an aggregate deductible in several policies.

Types of Deductibles in Health Insurance

Many policyholders ask what is deductible option in health insurance because it directly impacts both premiums and out-of-pocket expenses. In India, health insurance deductibles are of the following types, namely:

Compulsory Deductible: These deductibles are mandatory for the insured person and pre-defined as per your chosen plan. It has a fixed amount you must pay each time you file a claim.

Voluntary Deductible: It is an optional feature given to insured persons to minimise their premium costs.

Comprehensive Deductible: This refers to a single deductible applicable to all the coverage policyholders added to the policy, which will continue until one reaches the maximum limit.

Non-Comprehensive Deductible: It applies only to some specific coverage under a health insurance policy. One has to pay the deductible only before getting a claim for specific medical treatment expenses, and not all expenses.

Check for the availability of a deductible before buying any cashless medical insurance policy. Review the deductible details, such as the exact amount, time, etc.

Advantages of Deductibles in Health Insurance

Health insurance with deductible plans are best suited for people who want financial protection but are comfortable covering smaller medical costs themselves. Deductibles help insurers manage risk and control claim costs. By requiring policyholders to pay a portion of the medical expenses upfront, insurers can encourage responsible use of healthcare services, reduce the frequency of small claims, and improve financial stability.

Take a look at the benefits of deductible for policyholders.

Lower Premium Amount: The higher the deductible, the lower the premium. A policy with a deductible has a lower premium amount because the insurer may reward you for sharing the medical expenses.
Mindful Claim Requests: When you have a specific set limit of money to pay yourself, you will carefully make the claim requests. Hence, safeguarding your SI for the actual time of need and when a huge amount of money is required for treatment.
No-Claim Bonus (NCB): When you don’t raise a claim for small amounts, you can earn an NCB, ultimately benefiting you. You can use NCB to enhance your policy sum insured without paying any additional premium.

Disadvantages of Deductibles in Health Insurance

In health insurance, deductible also have a few disadvantages for the insured; they are mentioned below.

Bear the Initial Cost: Even if you have an insurance policy, you must arrange the deductible amount.
Arrange Funds in a Challenging Situation: During those emergency hours, arranging the medical expenses can turn into a stressful situation.

Significance of Health Insurance Deductible

Wondering what is health insurance deductible and how it affects your policy? Know the importance of having a deductible in health insurance. The amount of deductible the insured must pay is mentioned in the policy terms and conditions. Let's understand its significance:

Deductibles are applied to safeguard the insurance providers' interests from policyholders who do not make genuine health insurance claims or make claims of small amounts.
It deters policyholders from making unreasonable claims and helps them realise they need to use their policy for genuine cases.
The chances of fraudulent claims will reduce significantly with a medical insurance deductible.
A higher deductible can be a disadvantage; when the claim amount is less than the deductible amount specified, the policyholders have to bear the costs from their pocket. Hence, you should pay the utmost care and thought while buying a health plan.

What to Choose- Higher or Lower Health Insurance Deductible?

The deductible is calculated after considering insurance coverage, income, the sum insured, etc. There is an aggregate deductible in health insurance in most individual, family, or top-up plans. The amount may vary from plan to plan.

What are High Deductibles in Medical Insurance?

Choosing a higher deductible amount in health insurance can reduce your premium but may increase your upfront costs during a claim. A high deductible health insurance is a type of mediclaim policy under which you have to pay a higher portion of your medical expenses before your insurance coverage begins. With this, you typically pay lower premiums and save money. Other features of High Deductible Health Insurance Plans are:

Lower Premiums: These require you to pay significantly lower premiums, making them suitable for those who want to buy an affordable health insurance policy.
Risk of Unexpected Costs: They carry the risk of significant out-of-pocket expenses during major illnesses or unforeseen medical emergencies.
Higher Out-of-Pocket Expenses: There are higher upfront out-of-pocket costs before insurance coverage begins at the time of a medical emergency.

Who Should Choose a High Deductible Health Insurance?

To make informed decisions while selecting a policy, it’s important to understand what is deductible in health insurance and its role in claim settlements. Choosing a health insurance policy with a high deductible amount is a smart option for the following individuals. If you meet the criteria below, then you should choose it:

looking to lower your premium costs.
enjoying overall good health and have a clean medical history.
healthy, young, active and have minimum healthcare needs.
not covering dependents, children, or elderly family members covered under your policy.
able to manage higher out-of-pocket expenses during a medical emergency.
not planning for any hospitalisations shortly. comfortable with coverage starting after higher initial expenses.

Who Should Choose a Health Insurance Plan with Lower Deductible?

With a lower deductible plan, you pay a smaller amount from your pocket as compared to a high deductible plan. Here, the insurer takes on the financial responsibility earlier, giving you quicker access to benefits. But you need to invest more in premiums. Other characteristics of low deductibles in health insurance are below:

Reduced Personal Expenses: A smaller initial payment for medical costs reduces your immediate financial burden during hospitalisations or treatments.
Higher Insurance Premiums: Lower deductible comes with higher premiums.
Faster Access to Insurance Coverage: Insurance benefits begin much sooner, offering better protection against unexpected healthcare expenses.

Who Should Consider a Low Deductible Health Insurance Plan?

Choosing a low deductible can be beneficial if:

You might need a medical procedure or surgery (the coverage will begin after serving the waiting period).

may need a medical procedure or surgery (the coverage will begin after serving the waiting period).
are living with a critical illness or have pre-existing medical conditions.
are a senior citizen.
dependents need frequent medical attention or routine doctor visits.

Factors Impacting the Calculation of Medical Insurance Deductible

While understanding the concept of health insurance deductible is vital, the factors affecting its calculation are equally essential. Below are some common points to consider while deciding the deductible amount:

Pre-existing diseases
Present health conditions
Past medical history
Lifestyle habits

If you still need to opt for health insurance or your renewal is due, consider how a deductible can benefit you. Get the best health policy from Care Health Insurance at an affordable premium and deductibles to minimise the burden of high treatment costs.

Differences Between Deductible, Co-Pay, and Co-Insurance in Health Insurance

All these terms mean paying out-of-pocket, but the conditions and situations differ. The table below explains the difference between medical insurance deductible, co-pay, and co-insurance.

Deductible	Co-Pay or Co-Payment	Co-Insurance
The pre-decided fixed amount is what the insured must pay on an aggregate basis. Total Claim- Deductible Amount = Payable Amount (by the insurance company)	The insured pays a percentage of an approved medical bill for prescriptions, doctor visits, etc.	The percentage of the bill you pay after meeting your deductible may vary from one service to another—for example, 30% for MRI and 40% for Angioplasty.
Paid either per claim or per policy.	Applies to each claim. Every time you make a claim, you have to pay the co-pay limit.	Applies to each claim. Similarly, you’ve to clear the co-insurance amount after paying the deductible.
For example, Mr Sharma has a policy of Rs 4,00,000/ with a deductible of Rs 10,000/. He makes a claim request of Rs 2,00,000/; he needs to pay Rs 10,000 from his own pocket, and the rest will be paid by the insurance company.	For example, if you have a policy with an agreed 20% co-payment and now have an approved claim of Rs 1 lakh, you must bear the co-payment amount, i.e. Rs 20,000.	For instance, if a medical bill of Rs 55,000/ is covered by a policy with a chosen deductible of Rs 5,000/ and Coinsurance of 10%, the sum remains Rs 50,000/ after paying the deductible. After deducting 10% (coinsurance) from Rs 50,000/, the insurance company will pay the remaining balance of Rs 45,000/. The policyholder will pay the rest of the amount.

So, consider your health requirements, willingness to take risks, and spending money, and then decide whether you want to take a high deductible or low. If you need professional advice on the same, contact us at: 1800-102-4499.

FAQs on Deductible Health Insurance

Q. What is a reasonable deductible for health insurance?

Many insurance companies have a 10%-20% deductible as per the policy.

Q. How much deductible should I pay?

You should choose the deductible amount according to your add-on covers, pre-existing diseases, health status, financial situation, age and lifestyle.

Q. What are deductibles and limits in insurance?

Deductibles are fixed out-of-pocket amounts the insured must pay before the insurer starts covering medical costs. In contrast, a limit is the maximum amount the insurer will pay for a claim under the policy.

Q. When can I change my deductible amount?

You can modify your voluntary deductible on policy renewal by reaching out to your relationship manager to complete the process.

Q. Is deductible good for health insurance?

Yes, deductibles can lower your premium and help preserve your sum insured for major medical needs. They also encourage mindful claims, which may make you eligible for a No-Claim Bonus.