When it comes to health insurance, a word you’ll no doubt come across is ‘excess’. Before choosing a policy, it’s important to understand what excess is. An excess, also known as an out-of-pocket expense, is the upfront amount you pay towards your hospital bill when you make a claim on your Hospital cover. You’ll need to pay your excess before receiving treatment, and only if you’re admitted to a private hospital. Think of it as your contribution to the cost of your treatment before your health insurance kicks in. The higher the excess you choose, the lower your premium will be, and vice versa. This allows you to choose health cover that will best suit your budget and healthcare needs.
When do I pay my excess?
Imagine you have Hospital cover with a $500 excess, and your hospital stay for an appendectomy costs $5,000:
You would directly pay the hospital the $500 excess amount upfront;
A portion of the remaining $4,500 will be paid by Medicare (if you’re an Australian resident);
Then depending on your cover, your private hospital insurance would cover the remainder of the hospital bill.
It's important to note that some out-of-pocket expenses may still apply and that your excess applies to Hospital cover only and not to Extras cover (which includes things like dental and physiotherapy).
Benefits of a higher or lower excess
There are advantages and disadvantages to choosing a higher or lower excess. Here's a breakdown to help you decide what's best for you:
Benefits of a higher excess
Lower premiums: The most significant benefit of a higher excess is a lower premium or health insurance cost. This can be a great option if you're generally healthy and don’t expect to be going to the hospital often.
Financial incentive for preventative care: Knowing you have a higher excess might encourage you to prioritise preventative healthcare measures, minimising your chance of a hospital stay.
Benefits of a lower excess
Reduced out-of-pocket costs: If you anticipate needing hospital treatment, a lower excess minimises your upfront costs. This can be particularly important for those on a tighter budget or who have pre-existing conditions.
Peace of mind: Opting for a lower excess can provide peace of mind, knowing you'll have less to pay upfront if you are admitted into hospital.
When do you pay excess on health insurance?
You typically pay the excess when you're admitted to a private or public hospital for treatment covered by your policy as a private patient. This applies to planned admissions (e.g. elective surgery) and emergencies.
Here are some other tips to remember about excess:
Multiple admissions: Some policies allow you to only pay the excess once per year, regardless of how many times you're admitted. Be sure to check your specific policy information.
Family cover: If you have family health insurance, each member might have to pay an excess when admitted to the hospital. There are some health funds that don’t require an excess to be paid for dependants under 21 years old.
Gap cover: Some policies might include "gap cover," which helps bridge the gap between what Medicare pays and what your health insurer pays, potentially reducing your out-of-pocket expenses.
Making the right choice
The ideal excess amount depends on your individual circumstances. Consider your health history, budget and risk comfort when making this decision. If you're unsure what excess level is best for you, exploring the different health cover options offered by Qantas Health Insurance can be a great starting point. If you have any questions, call our health insurance experts and they’ll help you choose the policy that best suits your needs and budget. Call 13 49 60.
Disclaimers
Qantas Health Insurance is issued by nib health funds limited ABN 83 000 124 381 (nib) a registered private health insurer, and is arranged by Qantas Airways Limited ABN 16 009 661 901 (Qantas), for which Qantas receives commission. The above general information is not personal advice and individuals should consider their personal circumstances and consult an expert before making any decisions.
