1. Home
2. Blogs

Aggregate Deductible in Health Insurance Explained

• 
• 
• 
• 0
• 0

Health insurance offers valuable financial protection in the event of unexpected medical emergencies. That’s why having the right coverage in place is important. It safeguards you from the high costs of medical care and gives you peace of mind. However, before you buy a health plan, it is important to understand some key terms associated with it. One such term is the aggregate deductible, which determines how much you pay for your medical expenses yourself before the insurance begins covering your bills. Read on to understand what an aggregate deductible is, how it works and if you should consider it.

What is Aggregate Deductible?

An aggregate deductible in health insurance is the amount that is calculated cumulatively over a specific period, usually spanning one policy year. It is often used in family health insurance plans and is applied to the total amount of medical expenses incurred during the policy year. Under the aggregate deductible, the coverage starts only after the total family deductible is paid out-of-pocket, even if the claim is made by one family member.

Is Aggregate Deductible Good or Bad?

This depends on individual preferences and affordability. An aggregate deductible helps in reducing the premium and it is beneficial for those who are healthy and don’t raise claims regularly. However, for those with chronic medical conditions, it is often difficult to predict how much they will end up paying out of pocket over the course of one year because it is calculated on the total medical expenses incurred.

How Do Aggregate Deductibles in Health Insurance Plans Work?

Here’s how aggregate deductibles work in health insurance plans:

1. In a regular health plan

If your regular health insurance policy has an aggregate deductible, you must pay all your medical expenses up to that deductible before the insurance company starts covering costs.

Here’s an example:

• You have a health insurance policy of INR 8 lakhs.

• The aggregate deductible is INR 40,000.

• You get hospitalised and the bills add up to INR 25,000, which you pay yourself as it is less than the deductible amount of INR 40,000.

• Suppose there is a second hospitalisation in the same year, and the bills add up to INR 30,000.

Now your total medical expenses are INR 55,000. Since this exceeds the deductible of INR 40,000, the insurance will pay the extra INR 15,000 from the second bill.

2. In a super top-up plan

This health plan gives you additional coverage after your medical costs go above a certain limit (called the deductible). It works best along with a base plan.

Here’s an example:

• The sum insured of your base health plan is INR 4 lakhs.

• You also have a super top-up plan of INR 15 lakhs with a deductible of INR 4 lakh.

• Your first medical bill adds up to INR 2.5 lakhs, which your base plan pays.

• There was another medical emergency during the same policy year, and the hospital bills amounted to INR 3 lakhs.

So, your total hospital expenses so far are INR 5.5 lakhs, which is more than the deductible of INR 4 lakh. In this case:

• Your base plan covers up to INR 4 lakhs total.

• The remaining INR 1.5 lakhs is covered by your super top-up plan.

If you have more hospital bills during the year, the super top-up plan will cover them (up to INR 15 lakhs), since the deductible is already met.

Why Should You Opt for a Health Insurance Policy with an Aggregate Deductible?

If you are young, in good health and rarely need medical care, a health plan with an aggregate deductible can be a cost-effective option. These plans usually come with lower premiums, so you pay less. They work well for individuals who don’t frequently visit the hospital or file many claims. Even if you don’t use the insurance much, the low premiums won’t pinch your pocket. Therefore, health insurance with an aggregate deductible is a smart option if you want coverage for big medical bills without paying high premiums.

Types of Deductibles

A deductible in health insurance is a portion of the medical expenses you must pay out of your pocket before making an insurance claim. The insurer will start paying up only after you have paid the deductible. This means the insurer will cover the cost only when the claim amount exceeds the deductible.

In India, deductibles are mainly of two types – compulsory and voluntary:

1. Compulsory deductible:

As the name suggests, this deductible is compulsory and governed by the insurance company. When you file a claim, you have to pay this amount mandatorily. For instance, if the compulsory deductible of your health insurance is INR 10,000, and your medical bill comes to INR 60,000, you have to pay INR 10,000, and the insurer will pay the remaining (i.e., INR 50,000).

2. Voluntary deductible:

This is not compulsory and you can opt for this deductible in order to reduce the premium. The higher the deductible, the lower the premium. So, this is ideal for people who do not file claims on a regular basis and want affordable premiums. Choose the voluntary deductible wisely based on your affordability because you have to bear this amount.

Let’s say you choose a voluntary deductible of INR 50,000, and the claim amount is INR 85,000. So, you have to pay INR 50,000, and the remaining INR 35,000 will be covered by insurance.

Others can include:

3. Cumulative deductible:

This applies only to family health insurance plans in which multiple members are covered under one plan. As the sum insured in a family floater is shared among all insured family members, the cumulative deductible is applicable when any member makes a claim.

4. Comprehensive deductible:

A comprehensive deductible applies across all covers; hence, the name comprehensive. It is a single deductible that keeps adding up till the total deductible amount is paid.

5. Non-comprehensive deductible:

This deductible does not apply to the entire policy but only to specific covers. You may have to pay for the specific costs before filing the claim.

Advantages

• Deductibles lower your insurance premium. This option is ideal for those who don’t raise claims frequently. The higher your deductible, the lower your premium will be.

• Some insurers offer discounts if you opt for a voluntary deductible.

• As the deductible has to be paid out of pocket, it discourages policyholders from making small claims and also avoids unnecessary procedures. This will also help them earn a no-claim bonus (NCB).

Disadvantages

• A deductible can increase your out-of-pocket expenses because the insurer will pitch in only after you have paid it.

• If you have multiple medical emergencies during a policy year, it can cause a significant financial burden on you because deductibles are applicable to each claim.

• It can deter people from seeking timely medical care to avoid spending out of their pocket.

Conclusion

The aggregate deductible option in health insurance can be a suitable choice for some, but it may not be the best option for everyone. If you are healthy, don’t visit the doctor often and want to save on monthly premiums, choosing a plan with a deductible can be a good option. However, if your medical expenses are typically high and you are not comfortable paying a large amount out of pocket before your coverage begins, it may be better to avoid it. Before choosing a plan, it is essential to consider your health needs, budget, and the level of risk you are willing to take.

Health insurance plans can help cover your medical expenses and reduce financial stress during medical emergencies. That’s why it is essential to research carefully before selecting a plan. You can also use a health insurance calculator to compare premiums and benefits. This can help you find a policy that suits your needs and budget.

FAQs

1. How does a deductible impact the premium?

The premium remains unaffected in the case of compulsory deductibles. But in the case of a voluntary deductible, the higher the amount, the lower will be the health insurance premium.

2. Do I have to pay the deductible first to claim coverage benefits?

Yes, the insurer will start covering your hospital bills only after you have paid the deductible amount. This means once the deductible threshold is reached, insurance will cover the balance amount. If the claim amount is less than the deductible, insurance will not pay anything.

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

This depends on your medical conditions and your ability to afford the expenses. If you need frequent medical attention due to chronic issues, it’s better to opt for a lower deductible so that the insurer will pay most of the expenses, reducing your financial burden. But, if you don’t have any chronic illness, a high deductible is advisable as your premium will be low.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

RELATED ARTICLES

Deductibles in Family Health Insurance: What to Know

What are the unique benefits of buying Optima Secure?

What are Deductibles in Health Insurance Policy?

Aggregate Deductible in Health Insurance: What It Is and Is...

Deductible for Health Insurance: Should it be High or Low?

---

• 
• 
• 
•