How Do You Pay Health Insurance Deductibles?

A deductible refers to a fixed sum you have to pay out of your pocket before your insurance company will start covering you. It is essential to be informed of when and how you are paying this deductible in order to make good use of your policy.

This guide discusses deductibles and their payment in health insurance.

What is a Deductible in Health Insurance?

A deductible is a set sum (for example, ₹25,000) that you are willing to pay out of your pocket before the insurance takes effect. Think of it as a spending threshold.

With a ₹25,000 deductible, you must pay the first ₹25,000 of your hospital bill yourself; thereafter, the insurer will cover the rest of the bill according to policy limits. In case your total bill is less than what is paid out as a deductible, then the insurer does not pay the claim at all.

When and How Do You Pay a Health Insurance Deductible?

Health insurance deductibles can be paid at:

● At Claim Settlement

The deductible is usually paid upon making a claim. In case you are paying hospital bills, you will pay directly to the hospital or provider your share (deductible). The remaining is paid by the insurer. For example, if your bill is ₹1,00,000 and the deductible is ₹25,000, you pay ₹25,000, and the insurer pays ₹75,000.

● Cashless Claims

Within a no-cash claim in a network hospital, the hospital receives payment through the insurer. In practice, the insurer will pay the hospital minus the deductible, which you will be required to pay to the hospital.

● Reimbursement Claims

In case you pay upfront (non-network hospital), you can later submit the bills to the insurer. They will pay you the applicable amount, minus the deductible.

The following data is an example of a deductible payment:

If your bill was ₹15,000 (which is less than the ₹25,000 deductible), you would be required to pay the full ₹15,000, but the insurer would not be required to pay at all.

Deductibles per Claim vs Annual

There are policies where the deductible is paid per claim, and also ones where a deductible is paid once a year. In the first case, you’d pay the deductible each time you file a claim.

In the annual model, once you meet the deductible for the year, the insurer covers subsequent claims in full for that year. Super top-up and comprehensive policies tend to employ an annual deductible.

Why Deductibles Exist (and Benefits)

Deductibles are employed by insurers to deter smaller or unnecessary claims. This also enables you to preserve your no-claim bonus (NCB), which can enable you to opt for a higher sum insured at the same premium at the time of renewal.

Additionally, setting a larger deductible at the time of policy purchase will help effectively lower your premium amount. In exchange, you just pay higher out-of-pocket for each claim. Always confirm in advance how your insurer expects to receive the deductible.