What is Deductible in Health Insurance?

Health Insurance Deductibles Explained

Health insurance plans are a lifesaver during emergency medical situations. However, while going through the medical policy terms, certain terminologies may seem confusing. One such factor is the 'deductible' in a health insurance plan.

Understanding Deductibles in Health Insurance

An insurance deductible is the value of money a policyholder must settle from themselves before their insurance policy begins covering the promised expenses. The deductible amount varies according to the nature of the medical insurance plan purchased. It can range from several thousand to even a few lakh rupees.

Health insurance companies have introduced deductibles in their policies for many reasons. The primary ones include:

●Deductibles help reduce the frequency of small claims.
●This parameter encourages all the policyholders to exhibit responsible use of their health insurance policy.
●Finally, by introducing deductibles, insurance companies successfully share their financial risks with the policyseekers

Overall, the addition of deductibles proves advantageous to both insurers and policyholders in several ways. You can probably better understand this viewpoint after reviewing the following example.

Let's assume you purchase a medical insurance plan with a Rs. 20,000 deductible. During the policy term, you are suddenly diagnosed with dengue and visit a nearby network hospital for treatment. There, the total bill comes to Rs. 80,000. In this scenario, you will need to pay Rs. 20,000 of the total bill out of pocket. Next, your insurer settles the remaining amount according to the terms and conditions of your healthcare plan.

However, you may wonder what happens if your total medical expenses do not cross the agreed-upon deductible of Rs. 20,000. In such instances, your health insurance company will not provide financial assistance, and you will be solely liable to pay the whole amount. 

What Decides the Deductible Amount?

Several factors come together to influence the deductible amount in a health insurance plan. It includes:

 
●Age
Typically, older policyholders may be given slightly more deductibles because they are more prone to avail of medical assistance.

●Premium Cost
If your premium is low, then the deductible amount will rise and vice versa.

●Health Status
If you are diagnosed with any such pre-existing diseases, then you can be subject to greater deductibles. This is because your insurance provider considers similar policyholders to be high-risk individuals.

●Policy Type
The type of policy you prefer obtaining also affects the deductible amount. For instance, if you choose a high-deductible health plan (HDHP) from Star Health, you will have a higher deductible and, consequently, a lower premium on your medical insurance.

Finally, opting for a medical insurance plan with a deductible increases your financial responsibility for out-of-pocket medical expenses. It encourages careful budgeting to prepare for unexpected medical emergencies before your insurer eventually begins coverage.