5 Things to Know About Health Insurance Deductibles

As healthcare costs continue to rise, health insurance has become a necessity for managing medical expenses. Despite this, many people hesitate to purchase health plans, often feeling that high premiums are only worthwhile if they make a claim. However, there are ways to reduce premium costs, such as using an aggregate deductible. An aggregate deductible helps cap your total out-of-pocket expenses for the year, particularly if you have multiple claims. By consolidating your deductible across several medical claims, it can ease the financial burden of healthcare costs. But, are there any downsides to this? Let’s dive in and explore.

What is Aggregate Deductible in Health Insurance?

An aggregate deductible in health insurance is the total amount a policyholder must pay out-of-pocket for covered medical expenses before the insurance company starts covering costs. Unlike per-claim deductibles, which apply to each claim separately, an aggregate deductible accumulates over a policy period. Once the total deductible amount is met through multiple claims, the insurer begins covering eligible expenses. This is common in family and group health insurance plans, where all members’ medical costs contribute to the deductible. While it can help lower premiums, policyholders must be prepared for higher upfront costs before insurance benefits apply. Let's understand this with the help of an example: Consider a hypothetical situation that you have opted for the following options while purchasing the health insurance policy: SI (Sum Insured): INR 10 lakh Deductible: INR 3 lakh Now, if you file a claim for INR 4 lakh, the insurance company will not pay the complete claim amount. You will have to pay INR 3 lakh out of your pocket and the remaining INR 1 lakh will be paid by the insurance company. This is because you had opted for INR 3 lakh as the deductible amount. Thus, it is best advised to have a detailed discussion with your general insurance company about the SI and deductible, before you purchase a health insurance policy.

Types of Deductibles

There are several types of deductibles in health insurance, each impacting how policyholders pay for healthcare costs. Here are the main types: 1.   Annual Deductible: The total amount a policyholder must pay for covered healthcare expenses in a year before the insurance company starts paying. Once the annual deductible is met, the insurer covers a portion of additional expenses. 2.   Per-Claim Deductible: Applies to each medical claim separately. For every new claim, the policyholder must pay the deductible amount before the insurer begins to contribute to the costs. 3.   Aggregate Deductible: The total deductible for a family or multiple members under a health plan. All claims combined count toward meeting the aggregate amount, after which the insurer covers further expenses. 4.   Embedded Deductible: Often seen in family health plans, this allows individual family members to meet their own deductible, but once the aggregate deductible is met, the insurance covers the entire family. 5.   Prescription Deductible: Applies specifically to prescription drug costs. It’s separate from the general healthcare deductible and must be met before insurance covers prescriptions. 6.   Co-insurance Deductible: After meeting the deductible, a percentage of the healthcare costs is shared between the policyholder and the insurer. The policyholder pays the coinsurance until the out-of-pocket maximum is reached. These deductibles are designed to lower premium costs but can affect how much you pay out-of-pocket for medical care.

Here are a few important things that you should know about deductibles:

• Deductible is applicable on a yearly basis for your health insurance policy.
• You can choose the deductible amount only on the top up health insurance plans like Extra Care Plus Policy. This is referred to as an aggregate deductible amount.
• The higher is the deductible amount, the lower is the premium cost. High deductible health insurance plans are also known as consumer-directed plans. You can decide the amount for the deductible, based on your medical history and body type. For instance, if you rarely fall ill, it might be better to opt for a health insurance plan with a higher deductible and lower premium.
• Deductible and copay are two different terms with different meanings. While deductible is the fixed amount you choose to pay for medical services, before your insurer starts paying for it, copay is the fixed percentage of the claim amount that you need to pay.
• Deductible does not reduce the SI (Sum Insured), it just reduces the premium amount.

Health Insurance is a service that looks after your finances in case of medical emergencies. It is best advised to get an insurance policy which fulfils to your requirements. Deductibles provide health insurance benefits such as lower premiums but health is more important than wealth, so choose your deductibles and the health insurance policy wisely.

Is Aggregate Deductible Good for You?

An aggregate deductible can be a good option for many people, particularly for families or individuals who expect multiple healthcare claims in a policy year. For family plans, it combines the total deductible for all family members, which means once the combined expenses reach the deductible amount, the insurance starts covering the costs. This can be beneficial if there are multiple claims, helping you cap out-of-pocket expenses. Additionally, it can allow for lower premiums, which can be an advantage if you anticipate lower medical needs. However, if you rarely need healthcare services, this type of deductible may lead to higher premiums and out-of-pocket costs, making it less ideal. It's essential to assess your healthcare needs to determine if an aggregate deductible is the right choice for you.

Faqs

How does a deductible impact the premium?

A higher deductible generally lowers the premium, as you agree to pay more out-of-pocket in the event of a claim. Conversely, a lower deductible raises the premium because the insurer covers more of the expenses upfront.

What is the difference between a claim and an aggregate deductible?

A claim refers to a request for coverage for a specific medical event or expense. An aggregate deductible, on the other hand, is the total amount that needs to be paid for all covered services by you before the insurance starts to pay, often applied to family plans.

What is the difference between aggregate and straight deductible?

An aggregate deductible is the total amount that must be paid by you (or your family) before insurance kicks in, typically used in family health plans. A straight deductible applies individually, meaning each member of a family must meet their own deductible before the insurance pays.

Should I opt for a high or low deductible in health insurance?

A low deductible means higher premiums but less out-of-pocket costs when you need care. A high deductible offers lower premiums but requires you to pay more upfront for healthcare services. Choose based on your budget, health needs, and risk tolerance. * Standard T&C Apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.