Deductibles, co-payments and limits explained for expats

Why deductibles, co-payments and limits matter

Two health plans can have the same name, cover the same countries and still leave you with very different bills. The difference usually lies in three words: deductibles, co-payments and limits. Once these are explained, comparing quotes becomes much easier.

Together, they answer two simple questions: how much will I pay myself when I need care, and how much will my insurer pay at most? The figures used in the examples below are for illustration only. Real amounts depend on the plan and the insurer you choose.

If you are new to expat cover, our complete guide to international health insurance for expats gives you the bigger picture first.

What is a deductible?

A deductible (also called an excess) is the part of your medical costs you pay yourself before the insurer starts paying. It works like a threshold.

Example (illustrative figures): your plan has a deductible of US$1,000 per year. In March you see a specialist and pay US$300. You pay it all. In June you have tests costing US$900. You pay the remaining US$700 of your deductible, and the insurer pays the other US$200, subject to the rest of your plan's terms. For the rest of the policy year, the deductible is used up.

Points to check:

• Per year or per claim? Many plans apply the deductible once per policy year, but some apply it to each claim or each condition.
• Per person or per family? On a family plan, check whether each person has their own deductible.
• Which benefits? Some plans apply the deductible to everything, others only to outpatient care or only to hospital care.

The general rule: the higher the deductible, the lower the premium, because you take on more of the small costs yourself.

What is a co-payment?

A co-payment (sometimes called co-insurance) is a percentage of each bill that stays with you, even after any deductible has been paid.

Example (illustrative figures): your outpatient cover has a 20% co-payment. A consultation costs US$150. The insurer pays 80% (US$120) and you pay 20% (US$30).

Many plans put a yearly cap on co-payments, so that once you have paid a certain amount in a policy year, the insurer pays in full for the rest of that year. Not every plan has this cap, and the amount varies, so it is worth checking. Without a cap, a co-payment on an expensive hospital stay could add up quickly.

Co-payments are common on outpatient benefits, and on some plans for specific treatments or for care in certain countries. Others have no co-payment at all.

Putting deductible and co-payment together

Example (illustrative figures): a plan has a US$500 deductible, then a 10% co-payment capped at US$2,000 per year. You receive a hospital bill of US$10,000. You pay the US$500 deductible, then 10% of the remaining US$9,500, which is US$950. In total you pay US$1,450 and the insurer pays US$8,550. Because you are still below the US$2,000 cap, the co-payment keeps applying to later bills until you reach it.

Overall limits, benefit limits and sub-limits

A limit is the most your insurer will pay. You will meet several kinds:

• Overall annual limit: the maximum the plan pays per person per policy year, all benefits combined. On comprehensive international plans this is often high, but it varies.
• Benefit limits: separate caps for specific types of care, such as outpatient, maternity, dental or physiotherapy.
• Sub-limits: smaller caps inside a benefit, for example a maximum per visit, a number of sessions per year or an amount for a particular test.
• Lifetime limits: on some plans, a maximum for certain conditions over the whole life of the policy.

You will also see phrases like "paid in full" or "as charged". These usually mean the insurer pays reasonable and customary costs for that benefit without a specific cap, but always within the overall limit and the policy terms.

Other terms you will see in a quote

• Waiting period: a period after your start date during which a benefit cannot be used yet. Maternity is a common example. Its length depends on the plan.
• Reasonable and customary charges: insurers may limit payment to the usual cost of a treatment in the area where you receive it.
• Pre-authorisation: approval you must ask for before planned treatment, such as a scheduled operation.
• Exclusions: what the plan does not cover at all. Pre-existing conditions are a frequent one, covered in our guide on pre-existing conditions abroad.

How do you choose the right deductible?

There is no right answer for everyone. Ask yourself a few honest questions:

1. Could I pay the deductible tomorrow without stress if I needed treatment? If not, choose a lower one.
2. How often do I see a doctor? If you have regular outpatient care, a low deductible may save you money overall. If you rarely claim, a higher one can reduce your premium.
3. What do I really want the insurance for? Some expats only want protection against large hospital bills and pay small costs themselves. Others prefer predictable costs with fewer surprises.
4. Who is on the plan? Families with young children often visit doctors more frequently, which can favour a lower deductible.

A good habit is to compare the yearly saving on the premium with the extra amount you would pay if you claimed. If the saving is small, a low deductible is often the calmer choice.

Questions to ask before you sign

• Is the deductible per year, per claim or per condition?
• Does it apply to hospital care, outpatient care, or both?
• Is there a co-payment, and is there a yearly cap on what I pay?
• What is the overall annual limit, and which important benefits have their own sub-limits?
• Are there waiting periods for the benefits I care about?

If a quote is hard to read, you do not have to work it out alone. Our advisors explain each plan line by line and compare 20+ international insurers for you, free of charge. Get an instant quote and receive a clear, personalised comparison by e-mail in about 2 minutes.

Useful resource: World Health Organization: universal health coverage