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?
Excesses typically range between $0 and $1,000 depending on the policy. With some insurers you can choose between a number of excess options. Obviously, 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?
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 if I have an accident?
If you are hospitalised as a result of an accident, most insurers will waive the excess requirement.
What about the kids?
On most policies there is no hospital excess for dependent children who go to hospital. Plus, your kids stay covered until they are 21-23 years old, at no extra cost, depending on the health insurer.
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 is the amount of money you agree to pay for each day that you are in hospital, up to an agreed amount.
For example, a Co-payment of $50 x 4 means that you agree to pay $50 for the first four days or nights you are in hospital – every day or night thereafter is covered by the health fund. This structure may differ with some policies having an unlimited clause i.e. it will be $50 per day for however long you are in hospital.
Weigh it up
When deciding which options suit you best, be mindful of your own particular situation. Policies containing an excess and co-payment for hospital admissions mean you could end up paying twice – a lump sum on admission and a further amount each day you spend in hospital. Also think about the ease or difficulty you may have stumping up an excess at short notice and then weighing up the hospital scenario against normal versus lower premiums. 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.
Below we have provided a snapshot of the current low premium market offerings for hospital cover health insurance with links direct to the insurers website for your comparison. Please note that this table has been formulated based on a single female policy holder located in NSW.
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