A deductible is usually a flat dollar amount of medical expenses that the policy owner must pay out of his own pocket, before the insurer start paying.
This is usually a trade off you in return for cheaper premiums from the insurer.
Essentially, you are willing to undertake a initial portion of your bills in exchange for lower premium charges by the insurer.
It is usually on a per year basis, i.e. it is applicable again on the yearly renewal of the policy.
There are basically two types of deductibles as follows:
- Annual deductibles
- Per incident deductibles
Annual deductibles. The insurer will only start paying only after the the total medical bills you have accumulated for the membership year breached the agreed deductibles amount.
Example. Deductibles of $5,000
- James was admitted to the hospital for two days from 14 Feb -16 Feb for $3,000. Since The bill of $3,000 is less than the deductible amount of $5,000 - the bill will have to be fully borne by James.
- On 16 April, unfortunately he was hospitalised again and the bill this time came up to be $3,000. If the deductible was a per annual deductible, James would have met the deductible, because the total eligible expense from the two cases combined exceeded the base limit of S$5,000 within the policy year, i.e. $6,000 in total ($3,000 in Feb and $3,000 in April). The insurer is now liable for any amount above the $5,000 deductibles - James will get a reimbursement of $1,000.
Per incident deductibles. The insurer will only start paying after the total medical bills for the incident breaches the agreed deductibles in the membership year.
Example. Deductibles of $100.
- James visited the doctor for flu and was billed $80. Since the total bill was less than the deductible amount, James will be paying the bill in full.
- James visits the doctor again for an injury and was billed $90. Since it is a unrelated incident from the earlier flu and the cost of treatment ($90) is still below the deductibles of $100,James will have to bear it in full again.
* Important note - Deductibles is usually applicable to each individual in the family policy. Unless state otherwise, each member has to independently fulfill the deductibles.