The year 2020 has truly put everything into perspective. With so many historical moments that 2020 boasts of, the Covid-19 crisis takes the cake. With millions of people who died every day, the virus created an unprecedented global meltdown. The world economy went for a complete toss. Companies seemed to be laying off employees every other day.
What worried us the most was that the healthcare infrastructure started failing. Due to the dangerous nature of the virus, medical costs rose alarmingly. Ever before the pandemic, medical costs were substantially high and the pandemic only added fuel to the fire. All of this led to people scrambling to buy health insurance covers.
Health insurance is the financial backup everyone is considering as their last saving grace. People are looking to buy health insurance online from the safe confines of their homes, thanks to all the physical distancing norms. So, if you are looking for the best health insurance plan that fulfills your requirements, you are not alone.
If the coronavirus pandemic has pushed you to decide on health insurance, you should prepare for a world of jargon. Among the many words concerned with insurance, one that makes a frequent appearance is the term “health insurance deductible.”
So, Why Should You Opt for Health Insurance Deductible? What Is It Even?
The health insurance deductible is, in simple words, the part of hospitalization expenses you pay from your pocket. Your health insurance provider pays off the rest of the bill afterward. Your insurance company covers the rest of your medical costs after you pay the insurance deductible amount which is usually applied once a year.
How Does a Deductible in Health Insurance Operate?
Now that we know what a deductible is, how does it work? A health insurance deductible is a fixed percentage or amount that you agree to pay from your pocket in case of a medical emergency. For example, if you have opted for a Rs 50,000 health insurance deductible with a health insurance plan, you will have to pay this amount by yourself on the first claim of the year,
However, if your medical bills turn out to be less than your deductible amount, then you have to pay them off by yourself. You cannot claim insurance unless it is more than the deductible you have chosen.
Why Do Health Insurance Plans Offer a Health Insurance Deductible?
Why is it that insurance plans include it all? Well, insurers use the insurance deductible as a form of security for the insurance provider or company. This is to prevent consumers from raising small-ticket claims or the frequency of filing claims. There are a few reasons why you have to pay a deductible even on the best health insurance plan.
Security for The Insurer:
A deductible acts as a sort of insurance, as it were, for an insurer against smaller and frequent claims. The deductible in health insurance also protects insurers from having to shell out the entire amount for every claim that a policyholder files. Without the health insurance deductible, insurance companies would have to shut down if they were to pay full price for all claims.
This amount set up by your insurer ensures that policyholders do not take advantage of insurance claims. The insurance deductible acts as a barrier so that policyholders cannot exaggerate or fake incidents to get paid especially smaller amounts. Health cover is a risk that an insurer is prepared to take for you. Therefore, it is prudent that your insurance provider takes steps to protect themselves.
Mitigation of Risk:
The health insurance deductible offers cushion risks against either party. The fixed amount helps insurance companies protect themselves from impossibly large claims. The deductible also protects policyholders from having to pay the entire amount from their pocket.
Deductible vs. Coinsurance and Copayment
If you have perused through your health benefit plans, then you have come across terms like ‘coinsurance’ and ‘copayments’ or ‘copays.’ A coinsurance refers to the payments you will have to make towards healthcare costs once you reach the deductible. After you attain the deductible amount, you will have to take on parts of the healthcare costs. Your comprehensive care health insurance will cover the rest of the costs. You will bear the cost of coinsurance until you reach the maximum amount that you pay out of your pocket.
A co-payment or co-pay consists of fixed amounts that you opt to bear for more specific healthcare expenditures. Co-pays do not require you to reach your deductible amount.
In short, co-pays are for specialized healthcare. Coinsurance is the amount that you have to pay when you reach your set health insurance deductible in a year. A deductible is an amount that you pay for medical bills after which your insurance provider pays the rest.
Why Should You Opt for Deductibles in Your Plans?
Deductibles are a very important part of any health cover. A deductible is beneficial for many reasons, namely:
A deductible in health insurance lowers the cost of premiums. Here, at Vital, we offer two deductible models – Rs 35,000 and Rs 1,00,000. Opting for the first will reduce your premiums by 60% while the latter will reduce them by a whopping 75%. A deductible is a lower-risk option for insurers. Therefore, the higher deductible you set with your insurer, the lower you will have to pay for premiums. Therefore, you can save money in the long run, especially when you know that you do not stand the risk of hospitalization.
No Claims Bonus
The health insurance deductible is not just a safety measure for the insurer. It is a chance for the policyholder to claim a bonus if they do not file health claims for a year. The No Claim Bonus (NCB) is a bonus that a policyholder is eligible for if they do not file claims for a year. This ensures that the policyholder remains fit and healthy. Therefore, the insurer does not have to share the risk for some time.
The safety net that an insurance deductible offers ensures that a policyholder need not pay the entire amount. All medical costs that hit the deductible will be shared between the policyholder and the insurer.
Therefore, a deductible is something that you should opt for if you are looking for the best health insurance plan available.