Learn all about co-payment and deductibles in insurance.
A deductible in insurance applies to the amount that you’ll have to foot at your own expense before your insurer pays for the rest of the medical expenses. For example, if your deductible is S$500, you will have to pay the first S$500 of your medical expenses yourself before your health insurer starts to reimburse you.
The deductible usually applies once every policy year.
There are two types of deductibles in health insurance plans for families:
- Embedded deductible
This option allows each family member to get their medical bills covered before a family’s collective deductible is met. If one family member meets his or her deductible, the benefits for that individual will kick in. And when multiple family members’ expenses meet the family deductible, the entire family will start to benefit from the insurance coverage.
- Non-embedded deductible
In contrast, a non-embedded deductible means that benefits only begin after the family’s deductible has been met, with no option for an individual’s deductible to be considered as a standalone.
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What is co-payment?
It is the amount you must co-pay or divide with the insurer after paying the deductible. It is most commonly stated as a percentage. For instance, if you have a 20% co-insurance, you will be responsible for 20% of the cost after the deductible.
Co-payments can be helpful if you need to see the doctor frequently, as they can help reduce your overall medical expenses. However, it is important to remember that co-payments are not the same as deductibles, and you will still need to fulfil the deductible amount for the policy year.
What does "no fee after deductible" imply?
This means that once you have paid your deductible for the year, your insurance company will pay 100% of the insured amount. You will not have to fork out for any co-payments. Treatments not covered by your plan, such as cosmetic surgery, are not included in this benefit.
Some plans may have a separate deductible for certain types of care, such as prescription drugs or mental health services. Be sure to check your policy carefully to see if this is the case.
Why are these out-of-pocket costs necessary?
Deductibles and co-payments are included in Singapore's MediShield Life and Integrated Shield plans. This is because these elements encourage everyone to take a more active part in controlling their medical care expenditures and reducing the over-consumption of medical services. These elements contribute to the long-term affordability and sustainability of all Singaporeans' healthcare expenditures and insurance premiums.
How do you cut your out-of-pocket expenses?
There are a few options for lowering your out-of-pocket expenses.
- Choosing panel experts included in your health plan's provider network, for example, may provide you access to discounted consultation fees.
- Requesting pre-approval of your claim before beginning any scheduled medical procedure is advisable as it assures you about the result of your claim.
- You may also add a rider plan to your Integrated Shield Plan to lower your out-of-pocket payments. One of the advantages of a rider plan is that it could provide deductible and co-insurance coverage, subject to restrictions. However, since March 2018, the Ministry of Health mandated that all new rider plans are to include a 5% or higher co-payment for owners to share responsibility for their healthcare requirements.
Benefits of insurance deductible
There are several benefits of an insurance deductible:
- It can help to reduce your premiums. This is because the health insurer will offer you a lower premium rate if you can bear some of the cost yourself.
- An insurance deductible can help you to save money on medical expenses. This is because you will only have to pay the deductible amount once each policy year, regardless of how many times you claim in the year.
How can you reduce your premiums through an insurance deductible?
There are several ways to reduce your premiums with an insurance deductible:
- The most common way is to choose a high deductible. This will allow the health insurer to offer you a lower premium rate.
- Another way to save money on premiums is to take out a family policy instead of an individual policy. This is because family policies usually have a higher deductible than individual policies.
- You should always shop around and compare different health insurance policies before buying. This will help you find the policy that offers the best value for money.
Risks associated with health insurance deductibles
You may have to pay more out-of-pocket for your medical expenses, especially if you have a high deductible.
It may also be more challenging to claim reimbursement for your medical expenses, since you’ll have to hit your deductible before your benefits kick in. If you foresee needing to claim substantially, a low deductible may be more suitable for you.
What to consider when choosing an insurance deductible?
When choosing an insurance deductible, you should consider the following:
- The type of coverage required and the amount to be paid at your own expense. If you need a lot of coverage, you may want to choose a low deductible so that you can have peace of mind knowing that your medical expenses will be covered.
- If you are only looking for a bit of coverage, you may want to choose a high deductible so that you can save money on your premiums.
Health insurance deductible FAQs
What is the distinction between a premium and a deductible?
A premium is equivalent to your regular car maintenance payments. To maintain your car, you must make payments, just as you must pay your premium to keep your healthcare plan current. A deductible is an amount you pay for healthcare services before your insurance kicks in.
Is a deductible required for all insurance plans?
A deductible is not required for all health plans, and the amount varies per plan. Every year, it starts over, and you must meet the deductible for that year before your plan benefits begin. Remember that only what you pay for approved medical expenses goes toward your plan's deductible.
Deductibles in healthcare insurance allow you to receive coverage while keeping premiums affordable. Further boost your protection against serious illnesses with these best cancer insurance plans.
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