What is Excess in Health Insurance?

Most people who take out private health insurance are keen to explore ways to save money. Among many ways, the excess option is one method of lowering your premium.

A traditional insurance excess is a one-off payment you need to make every calendar year to claim your hospital treatment or hospital care. This means agreeing to pay a certain amount towards your medical bills, usually ranging from £0 to £5,000 depending on the health insurer and health policy. However, the amount is no more than the excess you agreed upon when you signed your insurance policy.

To put it clearly, let’s give you an example:

Suppose your hospital treatment amounts to £2,500, and you agreed to a policy with a £250 excess. That means you would need to pay £250, while your current health insurance provider will pay the remaining health care costs of £2,250.

Instead of a traditional excess, other providers like WPA offer something called “shared responsibility,” where you agree to pay a percentage (typically 25%) of any claim, up to a maximum annual figure.

Here’s an example of this shared responsibility type of excess offered by insurance providers:

David’s policy starts on the 1st of January every year, and he has a shared responsibility of £500 with a 25% agreement. In February, he sees a consultant who charges £750 for an ultrasound and two consultations. As a result, David has to pay £187.50, which is 25% of the £750 medical service bill. That means if a second claim arises later that policy year, he will be charged a further £312.50.

How Does an Excess Work?

You have the option to add an excess to any medical insurance policy you choose. However, you must be able to cover the expense if you need to make a claim.

The cost of the hospital treatment you receive under your private health insurance policy will be split between you and your insurer, with whom you will pay your excess, plus anything exceeding the cover limit of your health policy.

You may be required to pay a health insurance excess on every claim you make or only on the first claim in each policy year. You can find this information under the terms and conditions of your policy.

How Is Health Insurance Excess Paid When You Need Hospital Care?

Understand better how a health insurance excess work by learning the payment procedure when you need the services of health professionals and private hospitals. Every health insurance provider has a different process, but most of them follow these steps:

Step 1: Inform Your Health Insurer

When your medical specialist prescribes medical treatment, and you decide to push through with it in a private hospital, you need to call or visit your insurance provider. They would provide you with an authorisation number or code. Often, designated hospital staff will contact the company on your behalf, especially for the unplanned hospital admission.

Most insurers have payment rules wherein you must pay the excess upfront before admission and hospital treatment. It is usually the case if you have a traditional excess cover type, as the specific amount is already known.

Step 2: Proceed to the Hospital

With your insurer’s authorisation, make arrangements with specialists and any private hospital accepting payment from your specific insurer. Once you’re in the hospital, the staff will take it from there and provide you with instructions. You can then proceed with your consultation and medical treatment with your choice of specialist.

Step 3: Billing

After providing you with the health services you require, you’ll receive a bill once you’re ready to go home as per your choice of specialist’s advice. This bill will include the total amount charged and an analysis of the hospital costs. In other words, you’ll be given a detailed and clear list of tests, procedures, medical specialist professional fees, and other range of services provided that your insurance policy covers and does not cover.

Step 4: Pay

Review your bill to see any discrepancies, and pay the out-of-pocket hospital expenses – the actual hospital costs not covered by your insurance. Remember, you will need to pay the total amount if it’s less than or equivalent to your insurance excess. Otherwise, your insurer will take care of the remaining medical costs.

Step 5: Inform Your Insurer

Communication with your private healthcare insurance provider is essential, even after your treatment. Some conditions will need repeated hospital care, ongoing treatment, and the expertise of health professionals within one calendar year. Thus, when you’ve reached the maximum annual limit of your excess, your insurer will take sole responsibility for paying the healthcare costs.

Of course, this still depends on your policy’s level of cover, so you might still have out-of-pocket hospital expenses. That’s because you would need to pay a portion of the medical costs not covered by the protection offered in the policy.

Health Insurance Excess Underwriting FAQ’s

Do you have to have an excess on your health insurance policy?

No, you don’t need to have any excess on your policy. This may increase your monthly premium, but you won’t be required to pay anything when you make a claim.

How do I choose the right health insurance excess amount?

Remember that you will have to pay this excess if you make a claim, so it’s crucial to work out what you can afford to pay. For this reason, it’s not advisable to choose a very high amount of excess solely for the sake of reducing your premium. Our advisers here at Clarity Health Insurance can help you calculate a reasonable and realistic figure, so contact the team to discuss your situation.

When should an excess be added?

You can usually add excess to your health insurance plan at the point of renewal if you want to cut costs. For example, if your premium has gone up, adding an excess of as little as £200 can potentially reduce your health policy cost by up to 10%. Some insurers may also allow you to add a health insurance excess in the middle of your policy.

However, don’t rush to make this change to your policy. If you want to decrease your monthly premium, let us review your current health policy to see if there is an alternative before putting an excess on your plan. Get in touch with Healthcare Clarity now, and one of our expert advisers can talk you through the best course of action.

For more information and personal advice about excess regarding your cover options, please complete our online quote form and an expert adviser will call you.