Understanding health insurance deductibles and copayments
As one of the biggest factors that can impact health insurance premiums, both deductibles and copayments gain popularity these days. These are crucial financial aspects of your health plan, directly impacting your out-of-pocket expenses. Knowing the difference is the key to managing your family healthcare costs effectively.
Key takeaways
- deductibles can apply to either inpatient care, or per outpatient visits. Sometimes both together
- while inpatient deductibles are of a larger sum for example RMB 10-20k, outpatient deductibles are typically much less and are usually around RMB 200 to 500. Those will apply per visit.
- certain type of treatments will require % copayment from your side by default. Example can be dental care, where many insurance companies only cover 75-80% of the costs
- increase/decrease deductible amount in your health insurance is possible on renewal date, same as implementing any other changes to yoru insurance contract
- copayments often can be applied to regular outpatient care too. For example you can set your policy to cover outpatient expenses at 80% rate, which will require to contribute 20% of each bill out of pocket
What is a health insurance deductible?
In insurance glossary this sometimes can also be referred as excess. To keep it plain and simple, deductible is a fixed amount that will be on you to pay, before your insurance can kick in. Those are guaranteed out of pocket costs you will need to carry out before you can start using insurance policy. Most popular option here is inpatient only deductibles. F That means your deductible will only apply to hospitalization cases, thus you can still enjoy full cover on a day to day outpatient visits. Below is great explanation from Allianz China on how it works. Their plans support RMB 15k or 30k deductibles. A deductible of 15k can usually let you enjoy 20-30% discount on your inpatient part of the premium.
Above is an example of how insurance policy works with RMB 15k deductibles
On the other hand, if your deductible applies to all medical care, that will mean all medical expenses in aggregate in a policy year up to deductible amount will be on you. Regardless if it is inpatient or outpatient care.
Is outpatient deductible worth considering?
Outpatient deductibles in most cases apply per each outpatient visit separately. Usually those are in the range of RMB 200 and 500. Meaning every time you visit a hospital, RMB 200 will be on you to pay towards the medical bill. Depending on what arrangement your insurance company has with this hospital, they may either cover the whole bill and later chase you for the deductible amount, or hospital reception will ask you for this at the end of the treatment.
For reference, RMB 200 deductibles can let you enjoy 5-8% discount on outpatient part of your insurance premium. We find a tendency, if you expect to make more than 4-6 outpatient visits throughout your policy year, outpatient deductible will not make much sense. Since out of pocket expenses will excdeed the potential saving.
Copayment on outpatient bills works the same way and gets you same discount. Most companies can let you choose 20% to apply on your insurance plan. Keep in mind, with most companies both outpatient copay and deductibles will only apply to private medical facilities. If you go to public hospital, even VIP or International section, those may not apply.
How can I figure out what level of deductibles is best for me?
This will primarily depend on what kind of insurance policy you have in place. Let’s analyze it based on few examples.
Inpatient only plan
Definitely makes sense to consider deductibles here. Statistically, a person is likely to use insurance for inpatient case every 3.8 years. Meaning for the first 3 years you can enjoy the saving on your insurance price by having a deductible, and it almost always outweights RMB 15k deductible you will need to pay on 4th year. The greater the age of insured person, the larger the saving. This in particular becomes very obvious for members aged 60 and above, where having a deductible of RMB 15k can save you up to RMB 9500 in a single year.
Make sure to check our article on what insurance plan you can renew lifelong. This is in particular handy for long term expats.
Inpatient and Outpatient plan
Having inpatient only insurance deductible will still make sense here, for same reason as example we discussed above. This will ensure you can still enjoy full cover for day to day doctor clinical visits. For members under the age of 50 deductible saving may not be so substantial, and we see than almost 80+% of our clients dont have any inpatient deductibles here. Once your age gets higher, this changes, and by the age 65, more than 60% of members all have deductibles.
Now does it worth to include outpatient deductibles? If historically you visit a doctor more than 5 times in a single year, then it will not make much sense to get those. Especially if you have kids. Having deductibles here will carry on your out of pocket expenses to much higher level than potential saving. On renewal date, make sure to request your agent run some scenarios for you for adding deductibles in order to see if it makes financial sense getting into it.
If you need help finding the right health insurance to cover your needs, get in touch.
FAQ
When can I add deductibles and copayment to my insurance?
Such changes are usually only allowed on your renewal date. Make sure to run various price quotations about a month prior to it to see how price differs.
Can I have in&outpatient insurance plan without deductibles now but switch to inpatient with deductibles later?
Yes, you can. An example of our client who was keeping in and outpatient insurance up until age 57, upon which he decided to switch to inpatient only plan with deductibles. Such is usually allowed on renewal date.
What health insurance deductible makes most financial sense on saving?
As a general rule of thumb, RMB 15k deductibles will let you enjoy around 25% on insurance price. RMB 30k will be around 40%. Anything above RMB 50k inpatient deductibles will bring the price down by around 62%.