One such term is health insurance deductibles. Understanding deductible insurance meaning will help you plan your financial journey better and ensure your health insurance plan is aligned with your needs. 

This guide will discuss health insurance deductibles in detail, providing deeper insights into the different types of deductibles and their impact on your policy aspects with a proper understanding of what is out of pocket in medical billing.

What is Deductible in Medical Insurance?

A health insurance deductible is an amount that you need to pay as the insured at the time of claim settlement before the insurance company steps in. These deductibles are your out-of-pocket expenses when you file a claim with your insurer.

A high deductible health insurance policy means a higher out-of-pocket expenditure and a lower premium, and vice versa. Having a deductible is important for an insurer as it ensures that only genuine claims are raised, with the insured equally accountable for claim settlements.  

How Do Health Insurance Deductibles Work?

To understand how the medical insurance deductible section works, let us use an example. 

• Akshita has a health insurance policy with a deductible of ₹20,000.

• During a medical emergency, she files a claim for ₹50,000. 

• Her health insurance policy will only cover ₹30,000 for the claim. 

• Akshita will pay the remaining ₹20,000 as her out-of-pocket expenses.

Types of Health Insurance Deductibles

Compulsory Deductible Health Insurance

A compulsory deductible is a fixed amount imposed on the policyholders or insured individuals by the insurance company. As this is a mandatory deductible, you cannot reduce or increase the deductible value.  

For a claim settlement, you will only need to pay the compulsory deductible amount first, and then the insurer will pay the rest of the medical expense amount.​

Voluntary Deductible Health Insurance

A voluntary deductible is a customisable value where you choose the amount you are willing to pay as part of your out-of-pocket expenses. The amount chosen depends on various factors, such as affordability, health conditions, potential medical expenses, etc.  

This is a variable deductible amount that impacts your health insurance premium. You will need to pay both the compulsory and voluntary deductible amounts at the time of claim settlements. 

Comprehensive Deductible Health Insurance

A comprehensive deductible is a single deductible amount applicable for all the covers you combine with your health insurance policy. It will keep adding up until the total amount of the purchased policy is paid. This type of deductible is not yet applicable to the Indian health insurance market.  

Non-Comprehensive Health Insurance

A non-comprehensive deductible is a deductible that is only valid for specific covers instead of the complete health insurance policy. 

With this deductible, you might be required to pay a set deductible amount towards specific medical treatments and expenses before your insurer support covers the same. 

Zero Deductible Health Insurance

A no or zero deductible in health insurance is a plan where no deductibles are applicable to you, and the insurer covers the entire financial load of expenses in case of medical emergencies. 

As there is no deductible, the premiums for such plans are usually higher as the insurer covers all the expenses. Plans under this category still offer copayment benefits based on individual financial capacity. 

Impact of Health Insurance Deductibles

It is crucial to understand that health insurance deductibles significantly impact policy premiums, claim settlements, and out-of-pocket expenses. Let's discuss them in detail below. 

Impact on Out-of-Pocket Expenses

According to the medical insurance deduction section, out-of-pocket expenses refer to the payment made by an insured or policyholder at the time of claim settlement before the insurer support kicks in.

Deductibles have a direct impact on these out-of-pocket expenses, as a high deductible health insurance plan will mean higher costs for you during a medical emergency. On the other hand, low deductible health insurance ensures reduced out-of-pocket expenses as the insurer covers the majority of the sum. 

Impact on Premiums

Health insurance premiums are determined based on various factors, and deductibles are one of them. Deductibles and premiums have a direct correlation. Thus, with a higher deductible, the premium charged is lower, and vice versa. 

It is important to note that even though choosing a higher deductible in health insurance reduces your premiums, it increases your immediate out-of-pocket expenses significantly during emergencies. 

Impact on Coverage

If you choose a high-deductible health insurance plan, your premium may become more affordable, but you will also need to be more strategic about claims. A high deductible means increased out-of-pocket expenses during claim settlements, which might reduce your coverage. 

For example, if your deductible is ₹50,000, and you want to file a claim for ₹35,000, the insurer will not support you as the deductible is higher than the claim amount. However, if you have a critical illness insurance cover, your coverage for related treatments will not be impacted by the deductibles. 

Conclusion

Understanding health insurance deductibles, how they work, and their impact on policy premiums and out-of-pocket expenses will help you plan better. You must assess your needs and budget before finalising a deductible amount to ensure you are not left with a significant financial burden in times of need. 

Reliance General Insurance offers a wide range of health insurance plans for individuals, families and senior citizens. All the plans provide comprehensive coverage and a wide range of add-ons for customisation flexibility. 

Moreover, for trips abroad specifically for medical treatments or unexpected medical attention requirements during your trip, you can opt for our international health insurance plan to enjoy the necessary financial support, no matter where you are. 

Frequently Asked Questions

1. ​Are health insurance deductibles and premiums the same thing?

No, health insurance deductibles and premiums are not the same but have a direct influence on each other. Premiums refer to the monthly payments you make towards your health insurance policy renewals to ensure continuous coverage. 

Deductibles, on the other ​hand, refer to fixed or variable out-of-pocket expenses that you need to pay at the time of claim settlements before the insurer extends financial support. 

A high deductible reduces the premium amount, whereas a low deductible increases the premium for your health insurance policy. 

2. What should I choose between low and high-deductible health insurance plans?

The choice between a low or high deductible depends on individual needs and financial capacity. If you have frequent medical requirements, you must choose a low-deductible plan to reduce your out-of-pocket expenses. 

However, if you are young and have minimal medical needs, a high-deductible plan might be more suitable. You must, however, take into account the impact of deductibles on your policy premiums before making the final decision.