Deductible in Health Insurance

Does Opting For A Deductible in Health Insurance Actually Help You Save On Premiums?

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The higher the deductible in health insurance i.e. the yearly money everyone has to pay out of their pockets before the insurance starts working is, the lower are the premiums for that insurance.

In the twenty-first century, we cannot and should not imagine a life without health insurance. Especially in a situation where the pandemic has affected millions of people, not just health-wise but also financially thanks to the massive hospital and health expense bills the patients had to incur. Additionally, thanks to the advent of the digital age, individuals can easily buy health insurance online in India.

Deductible in health insurance is a concept not many people are aware of but something that can help you control the premiums of your policy. The higher the deductible in health insurance i.e. the yearly money everyone has to pay out of their pockets before the insurance starts working is, the lower are the premiums for that insurance. Opting for a deductible can reduce your premiums by 60-70%.

How Do Deductibles in Health Insurance Work?

With health insurance, you can choose to pay some amount from your own pocket before your plan gets activated to incur the health costs, or not. Deductible in health insurance is not compulsorily present in every health plan, but it is a fixed amount that is applicable only on the first claim every year (unlike a co-pay which mandates that you need to pay a percentage of the sum assured as part of every claim). This amount gets renewed every year, and only once the fixed amount is paid, the insurance starts working and pays for all your medical expenses.

It is important to keep in mind that the expenses that come under the covered medical costs are the ones that are generally calculated in health insurance deductible. Many new-age companies like Vital, however, allow you to redeem your pre-hospitalization treatment expenses against the deductible.

High or Low Deductibles

There are a variety of factors that affect the decision of choosing a particular deductible in health insurance alongside an affordable health plan.

Zero Deductible in Health Insurance

In case you or your family members have a higher chance of getting hospitalized – then is the recommended option. Opting for zero deductibles in health insurance will make you pay the premiums in full but will also give you access to the full sum insured chosen by you at the time of filing a claim.

High Deductible Plans and Health Savings Accounts

The plans have low monthly premiums and are helpful for people who only need medical attention and expenses occasionally have a deductible attached to it (generally). If you are a young, healthy individual, opting for health insurance with a deductible makes more sense as it would drastically reduce your premiums and not make a dent in your savings or monthly expenses.

A good thing to remember is that the presence/absence of deductibles in your plan does not affect the tax liability of your policy. In both cases, you will be eligible for up to â‚ą25,000 tax redemption as per Section 80D of the Income Tax Act of India.

How Does Health Insurance Deductible Save on Premium?

The Deductible-Savings Relationship

If the deductible is slightly increased, at the very beginning, i.e., when you buy the health insurance plan, then it allows you to make good savings on your premiums. This is because the deductibles are inversely proportional to the premiums. As a result, when you increase your deductible in health insurance then your premium rate automatically goes down. Policies with a very high deductible, meaning you pay a considerably lesser amount of premiums which can be both effective and beneficial over the years. It helps with your expenses and makes them look less predictable, especially during this global pandemic when you might suddenly have to pay humongous medical bills.

Out-Of-Pocket Optimization & Higher Coverages

Health Plans take care of you in such a way that your out-of-pocket maximization is ensured. For example, let’s say, you have Cardiac Care health insurance and you have reached your total payable amount (deductibles) and other cost-sharing, your insurance company will cover the rest of your medical costs. Since you’d be paying lower premiums, you can also opt for higher coverage which would come in especially handy if you’re treating chronic conditions.

Co-payments vs Deductibles

Many people confuse a co-payment and a deductible. While both might seem like the same concept of out-of-pocket expenses, there is a huge difference. Firstly, a deductible is a fixed amount that you opt for while buying a policy while a co-pay is a percentage of your sum insured. Secondly, the deductible is applicable on only the first claim of the year while the co-pay clause would be applicable on every claim you file which means that every time you get hospitalized, you’d have to pay something from your pocket.

Final Words

For all good reasons, health insurance is a must these days. With an unpredictable future and new diseases coming up, it is essential that we all get the best quality healthcare and treatment we deserve. Deductibles play an important role in lowering the health insurance premium and making it easier on our pockets to ensure healthcare for ourselves and our families. However, the choice of deductibles matters a lot on the kind of patient one is, and whether one has to purchase regular prescription medicines or go through frequent medical procedures and examinations. Keep these things in mind when you buy health insurance online in India. 

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