1. Home
2. Blogs

Aggregate Deductibles in Health Insurance Guide

• 
• 
• 
• 0
• 0

A medical emergency can happen at any time, so having health insurance is important for both peace of mind and financial protection. However, before choosing a plan, it is essential to understand some key terms so you can make an informed decision. One of these is the aggregate deductible, which is the total amount you pay for medical care before your insurance begins covering costs. Keep reading to learn what is aggregate deductible in health insurance and how it works.

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 reduce premiums and is beneficial for healthy people who don’t file many claims. 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.

Things to Remember While Choosing the Aggregate Deductible Option

Here are some key things to remember while choosing the aggregate deductible option:

1. Your age:

Age is an important factor to consider while selecting the aggregate deductible. If you are young and healthy, you may not have many medical expenses yet. Hence, you can choose a higher deductible and save on your premiums. However, if you are older, it might be safer to choose a lower deductible so you don’t have to pay too much out of pocket.

2. Your current health condition:

Your present health also matters. If you don’t have chronic illnesses and rarely visit doctors, an aggregate deductible can be a good option, as it helps reduce your premium. However, if you have ongoing health conditions, a lower deductible is safer to avoid large medical bills.

3. Your family medical history:

Consider your family’s history of chronic illnesses like diabetes, heart disease or kidney problems. Choosing a high deductible in such cases can be risky, as frequent medical treatments may lead to high out-of-pocket costs. It is usually safer to go for a lower deductible to protect your finances.

4. Family floater plans:

If you have a family floater plan, the deductible applies to everyone covered under the plan. So, you need to meet the full deductible before the insurance starts paying for any claims. Since a high deductible can lead to significant upfront costs, a lower deductible is a better option for families.

5. Financial readiness:

Before choosing a deductible, consider your ability to pay the deductible amount if a medical emergency occurs. A high deductible may lower your monthly premium, but it can lead to significant expenses during emergencies. Make sure your savings can cover the deductible if needed.

6. Frequency of medical visits:

If you or your family visit doctors frequently or take regular medications, a lower deductible can be more cost-effective, as it reduces the amount you pay before insurance kicks in.

Conclusion

The aggregate deductible in health insurance is good for young, healthy people who want to pay lower premiums, since they don’t need medical care often. However, if you have high medical costs or don’t want to pay a large amount out of pocket before your coverage begins, it is better to choose a plan with a lower deductible. Consider your health, family history and ability to handle unexpected bills when choosing a plan.

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 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

What are Deductibles in Health Insurance Policy?

What is the difference between top-up and super ...

Deductibles in Family Health Insurance: What to Know

Importance of Top up Plans in Health Insurance

What are the unique benefits of buying Optima Secure?

---

• 
• 
• 
•