Don’t be confused about these terms
Top-up plans work on a cost-sharing basis where medical expenses up to the deductible limit have to be borne by the policyholder. In order to pay the deductible amount, the insured can either use the sum insured from an existing health plan or contribute from their own pocket. The insurance company bears the medical cost only if the expenses cross the deductible limit.
A deductible does not reduce the sum insured. It means the amount of hospitalisation expenses that you need to bear before the policy starts paying. You can opt for a limit that suits your pocket; the insurance provider will not pay you up to the deductible limit chosen by you.
Therefore, if you already have a health plan of Rs 2 lakh, you can opt for a top-up policy of Rs 5 lakh with Rs 2 lakh as deductible. It means that the initial Rs 2 lakh will have been paid by your existing mediclaim and the remaining Rs 3 lakh will be borne by the top-up plan.
• Threshold limit
It is the level up to which your existing health-insurance policy covers hospitalisation expenses. Beyond this level, the liability to provide medical cover lies with the insurance company that has provided you a top-up plan.
It refers to the amount expected to be paid by you for medical services covered by the plan. In other words, co-pay means concurrent liability to pay a certain amount of your own contribution on a health policy to avail the health benefit up to the sum assured, subject to the type of policy or age restriction or other conditions enshrined in the policy. This is always at a certain percentage of the sum assured.