What is a health insurance excess and which is best for you?


4 minutes

02 April 2019

Woman sitting on blue couch typing on laptop

You can apply an excess to your Hospital insurance to reduce your premium. But how do you know what to choose when the options range from $0 to $750? We can help.

Like your car or home insurance, you can apply an excess to your Hospital insurance to make it cheaper. Health funds call this a ‘Hospital excess’, while some people know it as a 'health insurance excess'.

Generally, the higher your excess, the lower your premium.

The government has recently allowed health insurers to offer a higher excess. You can now opt for a $750 excess on select Hospital insurance products, so now’s a great time to review your Hospital insurance to see if you can save.

This article will help you understand exactly how Hospital excess works, and the pros and cons of choosing a higher or lower excess.

How does the excess work?

If you’re admitted to hospital for treatment, your Hospital excess is the amount of money you contribute upfront (out of your own pocket) towards your bill. You must pay this sum before you receive treatment.

Depending on your health fund and the Hospital insurance product you choose, you may have a pre-set excess, or you might have the option to choose your own.

The way it works is pretty simple. If you have a hospital excess of $500 and need to go to hospital, you’ll pay the first $500 of your bill, and your health fund will cover the rest (so long as the rest is covered by your Hospital insurance).

You only need to pay your Hospital excess for hospital treatment. You cannot apply an excess to your Extras insurance, so Extras services like dental check-ups or physio appointments, you won’t pay an excess.

How often do I have to pay the excess?

As an HBF member, you’ll only need to pay your excess once per member per calendar year, no matter how many times you go to hospital. Just remember that with HBF, an excess applies to both day and overnight surgeries, so even if you go in for a simple procedure (like a colonoscopy) you will still have to pay your excess.

The good news is, once you’ve paid your excess (whether that’s on a day or overnight surgery) you won’t have to pay it again for that calendar year.

Another thing to consider is that on all covers currently available for sale, HBF offers no excess for kids on hospital visits when they are covered under a family or single parent hospital cover.

Why choose a higher excess?

The higher your excess, the less you’ll pay in premiums. In other words, the more of your hospital bill you agree to pay, the less your insurer will have to pay. In return, your health fund “rewards” you with lower premiums.

Paying less in premiums can be a great way to save money on your health insurance premium. But be aware that if you do end up having to go to hospital, you’ll need to pay your excess upfront.

While there’s no way of predicting whether you’ll need to go to hospital, you may want to consider a higher excess if you:

  • Are young and healthy
  • Have never been to hospital before
  • Think it’s unlikely that you’ll end up in hospital
  • Can afford to cover the excess in the event of a claim i.e. you have savings you can dip into if necessary

Why choose a lower excess, or none at all?

If you choose a lower excess, or none at all, your health fund will have to pay more of your bill when you need to go to hospital. Because your health fund is covering a bigger cost, they will charge you higher premiums.

You may want to consider a lower excess if you:

  • Have a history of health concerns
  • Have made multiple hospital claims in the past
  • Feel that you may need to go to hospital in the future
  • Can’t afford to cover the excess in the event of a claim i.e. you have no savings you can dip into

If you’re still not sure how much excess to choose, you can always go somewhere in the middle.

Ultimately, your decision should come down to whether you can afford to pay the cost of your excess if you’re admitted to hospital.

Still unsure? Don't worry, we're here to help. Contact us and we'll help choose the best excess for you.