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Health Insurance Deductible Costs Explained


A health insurance cover acts as a savior during medical emergencies. It provides the much-needed financial protection during hospitalization. The insurance provider covers the medical expenses, thus allowing you to avail of quality treatment without any financial worries. You, therefore, need not arrange for funds at the last moment or tap into your life savings. You may simply focus on your health, while the insurer covers all your medical bills.

While requesting health insurance quotes or choosing the best policy, it is necessary to understand various health insurance-related terms. One of the most important aspects to take into consideration while comparing health insurance quotes is deductible cost.

Understanding deductible costs

The deductible cost in a mediclaim policy indicates the amount that you need to pay before your insurance company begins to pay its share. Deductibles are payable every policy year.

You may understand the concept of deductibles with the help of an example. Assume your health plan requires you to pay a deductible of INR 25000. In an event of hospitalization, if the medical expenses amount to INR 1.25 lakh, you have to pay INR 25000 towards the hospitalization cost. At this point, your health insurance plan will cover the remaining INR 1 lakh according to terms and conditions of the policy.

The main purpose of deductible costs is to lower the premium amount. Besides, insurers charge a deductible to reduce the number of unnecessary visits to the doctor.

It is imperative to understand the basic health insurance deductible costs. The following are two basic deductible costs explained.

  1. Co-payment

Due to the rising cost of treatment and hospital facilities, health insurance quotes are getting higher by the day. In order to reduce the cost of premiums, insurers provide an option of co-payment. According to the co-pay clause, the policyholder pays a proportion of the claim amount. Once you have paid your share of the claim amount, the insurance provider then settles the rest of the amount. Co-payment encourages judicious use of health plans and mitigates the liability of the insurance provider.

It is important to note that co-payment is generally expressed in percentage of the claim amount. Most health insurance policies have a co-payment in the range of 10-25 percent, though this figure varies from insurer to insurer. This indicates that in case you have a co-payment clause of 10% and your hospitalization expenses amount to INR 1 lakh, then you have to make out-of-pocket expenses of INR 10000. The remaining INR 90000 will be borne by your insurance provider.

  1. Co-insurance

Co-insurance may be defined as the amount payable by the policyholder after the deductible has been met. In most cases, health insurance policies that have lower premiums come with higher co-insurance and vice-versa. Co-insurance cost is expressed as a percentage of the healthcare cost. Assume that you have a co-insurance of 20% and your medical bill amounted to INR 10000. In case you have paid your deductible, you have to pay INR 2000 and the insurance provides covers the rest. However, if you have not met the deductible amount, you are required to pay the entire INR 10000.

Health insurance quotes may be higher these days due to medical inflation. However, it acts as a safety net against unforeseen medical conditions. Besides, you may avail of tax benefits of health insurance on the premiums paid. You may choose the provider who considers deductible costs while providing health insurance quotes. By opting for an insurer that provides co-pay option, you may avail of discounted premiums.

You may request quotes either by visiting local branches or through the Internet. Seeking online medical insurance quotes offers a great degree of convenience as well as discounted prices. You may, therefore, do so at the earliest, and avail of health coverage at the most competitive rate.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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