High Vs Low Deductible Health Insurance - Which One to Opt for?

What are Deductibles in Health Insurance?

Deductibles in health insurance refer to the portion of the medical expenses that you agree to pay out of your pocket before your insurer starts covering the rest. Whether you are buying an individual health insurance plan or a family floater health insurance policy, this predefined amount is stated clearly in the policy document.

For instance, if your mediclaim insurance policy of ₹5 lakh has a deductible of ₹10,000 and your hospital bill is ₹50,000, you will need to pay ₹10,000 first. After that, your health insurance provider will cover the remaining ₹40,000, as per the policy terms.

Notably, deductibles and premiums are closely connected to each other. Premium, you already know, is the amount you pay to keep your mediclaim insurance active, usually monthly or annually. If you choose a higher deductible plan, the lesser will be your health insurance premium because you are taking on more responsibility for initial medical costs. In contrast, a lower deductible means a higher premium, as your insurer covers more of the costs upfront.

What is a High Deductible Health Insurance Plan?

A high deductible health insurance plan is a type of mediclaim policy under which you have to pay a higher portion of your medical expenses before your insurance coverage kicks in. With this plan, you typically pay lower premiums, which can save you money upfront.

However, since the deductible is higher, you will need to pay more out of your pocket before raising health insurance claims.

Features of High Deductible Health Insurance Plans

Listed below are the critical features of health insurance plans with high deductible:

• Higher Out-of-Pocket Expenses- Health plans with high deductible come with higher upfront out-of-pocket costs before your insurance coverage kicks in at the time of a medical emergency.
• Lower Premiums- These plans require you to pay significantly lower monthly or annual premiums, making them suitable for those who want to buy affordable health insurance plans.
• Suitable for Young and Healthy Individuals- High deductible medical insurance plans are ideal for those with minimal healthcare needs, such as young professionals or those without chronic conditions.
• Risk of Unexpected Costs- Mediclaim plans with high deductible carry the risk of significant out-of-pocket expenses in the event of unforeseen medical emergencies or major illnesses.

When Should You Buy a High Deductible Health Insurance Plan?

A high deductible health plan can be a good option if you meet the following criteria:

• You have a good medical history
• You are young and healthy
• You do not have dependents or senior citizens added in your mediclaim policy
• You can afford to pay higher out-of-pocket costs in case of healthcare emergencies
• You do not foresee a planned hospitalization or major medical expenses in the next couple of years
• You are comfortable with a delayed health cover
• You want to keep health insurance premium low.

What is a Low Deductible Health Insurance Plan?

A low deductible health insurance plan is a type of policy where the deductible is relatively low. This means you do not have to spend a significant amount on medical expenses before your insurer starts contributing. However, in exchange for the lower deductible, these plans usually come with higher premiums.

While you pay more as premiums to maintain the low deductible health plan, your insurer begin covering your healthcare expenses much sooner.

Features of Low Deductible Health Insurance Plans

Here are the key features of health plans with low deductible:

• Lower Out-of-Pocket Costs- These plans require you to pay a smaller amount upfront before the insurance provider starts covering the medical expenses.
• Higher Premiums- While the deductible is low, the monthly or annual premium for these plans is typically higher.
• Immediate Coverage Benefits- With a low deductible mediclaim plan, the insurance coverage kicks in faster, thereby reducing your financial burden in case of hospitalization.
• Ideal for People with Frequent Medical Needs- Low deductible health plans are especially beneficial for people with chronic illnesses, families with young children, or those who anticipate frequent doctor visits or treatments.

When Should You Buy a Low Deductible Health Insurance Plan?

Consider opting for a low or no deductible health plan in the following scenarios:

• You have a critical illness or pre-existing diseases (PEDs)
• You are a senior citizen
• You or your family members covered under the plan require frequent doctor visits or regular medical care
• You are expecting a baby or planning a family
• You plan to undergo major surgery or medical procedure

High Vs Low Deductible Health Insurance- What is the Difference?

Have a glance at the table below for a quick comparison between high deductible health insurance and low deductible health insurance:

Should You Choose a Health Plan with Higher Deductible or Lower Deductible?

When deciding between a health plan with a higher or a lower deductible, it is essential to consider your health needs and your financial situation.

If you think you will not be able to pay your mediclaim policy premiums and only need health insurance for some minor medical emergencies, then you can opt for a plan with a higher deductible. However, this option works best only if you can afford to pay a portion of your medical expenses out-of-pocket in the event of an emergency.

Alternatively, if you do not want to lose out on coverage and want immediate health cover in case of an emergency, then go for plans with lower deductibles. In case of an emergency, these plans reduce the financial burden as the insurance coverage kicks in faster.

Ideally, a health plan with no deductible would provide the most convenient coverage, as it offers the best protection without requiring any upfront costs. But in certain plans the deductibles can be compulsory depending on the applicant's age and medical condition. However, the final decision depends entirely on your preferences and healthcare needs.