Role of Deductible in Lowering the Premium of Group Health Insurance
Deductible helps in lowering the premium of group health insurance. The deductible is the amount payable by the policyholder before the insurance company pays the claim amount. The insurer shall only pay the claim amount in case it exceeds the deductible amount.
Case Study
Let us understand how deductible helps in lowering the premium in group health insurance with a case study.
Mr. Mehta applied for subscribing group health policy for his employees for a claiming amount of Rs 1,00,000 per person. However, the employees were fit and not susceptible to health-related issues. Therefore, Mr. Mehta chose a deductible amount of Rs 10,000.
As per the deductible amount chosen by Mr. Mehta, the premium cost is likely to decrease. This is how deductible helps in lowering the premium in group health insurance. Now, if the claim exceeds Rs 10,000, then the insurance company shall pay the remaining amount.
For example, consider a claim is estimated at Rs 20,000. Under deductible terms mentioned in the insurance contract, MR. Mehta is likely to pay Rs 10,000. Another, Rs 10,000 is expected to be paid by the insurance company.
How Co-pay Helps in Lowering the Premium of Group Health Insurance?
Co-pay is the percentage of the claim which is likely to be borne by the policyholder under the group health policy. The policyholder under co-pay may opt for a specific percentage of the total claim payable by the insurance company. The percentage opted by the policyholder shall be borne by him.
The remaining percentage shall be payable by the insurance company. Since some percentage is payable by the policyholder, the insurance premium is likely to decrease. This way, the co-pay helps in lowering the premium of group health insurance.
Let us understand how co-pay helps in lowering the premium of group health insurance with the help of another case study.
Mr. Sharma is the owner of ABC Enterprise. He wished to subscribe to the group health insurance policy in order to indemnify his employees against unforeseeable events. He was offered the Co-pay by the insurance company in a range from 10% to 20%. He opted for 10% and purchased the insurance policy.
According to this, he is likely to bear 10% of the total claim arising from the medical bills of his employees. Since he has opted for co-pay, his insurance premium is likely to decrease. This is how co-pay helps in lowering the premium of the group health insurance.
Due to a health issue, one of his employees was admitted to the hospital. The employer filed the claim by filling out the claim form. The surveyor was appointed who estimated INR 1,00,000 as the total claim.
Out of the total sum, 10% is required to be paid by Mr. Sharma. He paid INR 10,000. The remaining amount was paid by the insurance company.
Conclusion
Co-pay and deductible help in lowering the premium for group health insurance. Some portion of the claim is paid by the insured. Therefore, it helps in lowering the prices of premiums of group insurance policy.
