Excess on insurance: What is it?

Co-Author: Michelle Norton

In the sometimes-confusing world of private health insurance it pays to be clear on exactly what your policy will cover – and what it won’t – before a medical emergency throws your powers of reasoning into a spin. One of the most common queries is about the health insurance excess. Here’s our quick guide on the subject.

What is a health insurance excess?

A health insurance excess is paid if you make a claim with your private health insurance company. When agreeing to an insurance policy your excess is decided. This allows you to choose a lower monthly premium with a higher excess for your private health insurance policy.

What is the purpose of a health insurance excess?

The concept of agreeing to pay a certain amount of money should you go to hospital came about as a direct trade off for lower monthly premiums.

How much are we talking about?

With some insurers, you can choose between a number of excess options. But, ultimately, the more excess you agree to contribute upfront as part of your cover, the lower your health cover payments will be.

How often do you pay a health insurance excess?

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You will only ever pay an excess if you go to hospital. How excesses are charged by each insurer – or even policy – will differ. For some policies, the excess applies only once per person per calendar year – or twice with a couples or family policy. That means, the excess payment is capped if you are unfortunate enough to have several hospital stays within the calendar year. However, on other policies, if you are unfortunate enough to be admitted into hospital twice, that would result in two excesses being paid in the one calendar year. The excess due is paid directly to the hospital prior to your admission.

What is the difference between an excess and a co-payment?

Both excess and co-payment options are designed to lower your health insurance premium. In both cases, you are agreeing to make an out-of-pocket payment for hospital admittance, in exchange for a lower up-front health insurance premium. An excess is the amount of money you pay towards hospital treatment, regardless of the number of days you are in hospital. A co-payment arrangement is where the insurer pays a certain percentage of the costs and you pay the rest.

Weigh it up

When deciding which options are the most suitable, be mindful of your own particular situation. Think about the ease or difficulty you may have stumping up an excess at short notice and then weighing this up against paying for a higher excess option.

It’s helpful to do the sums by comparing the level of health insurance cover that suits and playing around with different excess amounts on the calculator to see how they will impact on your regular premiums. And always check a policy’s terms and conditions before you sign up. Most health funds are only too pleased to clarify something you may need to double check, so don’t hesitate to ask.

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