What is a health insurance excess?

What is a private health insurance excess?

Insurance excess is an amount of money you pay towards a claim. For example, if your excess was £300 and your total claim was for £1,000 worth of treatment, you would pay £300, and your insurer would pay the remaining £700.

Almost all insurance policies from home to car cover, will have an excess, and private health insurance is no different.

As with other types of insurance, you may find some insurers split excess into two categories

• Compulsory excess which is an amount set by the health insurance provider.
• Voluntary excess, which is an amount you choose (but usually from a selection offered by the insurer).

The amount of excess you pay can vary considerably, from £0 up to £500 or even more.

Do I pay a health insurance excess for every claim I make?

This will depend on your insurance provider's terms and conditions. Some insurers will ask you to pay the excess for every claim you make, while others will only charge you the excess once in a 12-month period (the length of a typical policy). With this in mind, it's a good idea to check when the excess applies as it can make a considerable difference to what you end up paying overall.

It's also worth bearing in mind that if you're only asked to pay the excess once and your treatment continues into a new policy year, you will usually have to pay the excess again.

Why do insurance excesses exist?

Insurance firms use excess to minimise the number of small claims being made. This helps keep the value of payouts reasonable, which in turn, keeps costs down for all policyholders.

Why should I pay an excess for private health insurance?

Fundamentally, the higher your excess, the lower your monthly premium, which can help make private health insurance more affordable. Just remember that the excess should be within your means as you'll need to pay it to receive treatment.

Some insurers offer £0 excess, so you won't have to contribute to the cost of your treatment. However, this will typically mean you'll end up paying a significantly higher monthly premium.

How does private health insurance excess work?

It's up to each provider to set their own terms and conditions so remember to check what your health insurance policy states about excess.

Typically, you'll need to speak to your provider before you have any treatment. This is so they can confirm you're covered under the terms of your plan. If you are, you'll normally have to pay the excess amount just before treatment starts, your insurer will then pay the rest.  

What happens if my treatment costs are lower than my excess?

Again, your health insurance provider should explain this clearly in your policy documents. In most cases, you'll be expected to cover the cost of treatments until you meet your excess limit.

For example, if you have an excess of £300 and you have £200 worth of treatment, you'd need to cover the cost of this yourself. If you make another claim for £250, you would pay £100 (bringing you up to the £300 excess limit). Your insurer will pay the remaining £150 for this second claim.  

If your treatment costs less than your excess you can also choose to pay for it yourself without making a claim. If you decide to do this, the good news is your no-claims discount will not be affected.

Who do I pay the excess to?

You'll need to pay the excess directly to the hospital or health care provider.

Can I change my private health insurance excess?

You can change your excess at renewal but not usually before. If you decide to change your excess, you should check your health insurance policy first as there may be conditions about how much you can alter your excess.  

For instance, some health insurance providers will allow you to increase your excess from the minimum to the maximum at renewal, but if you want to decrease [AE2] your excess, you can only reduce it by a limited amount. For example:

• Your health insurance provider offers you a choice of excess - £50, £100, £200, £350, £500 and £750.
• In your first year, you choose the £50 excess.
• In the second year, you decide to increase your excess. Your policy allows you to increase this amount up to the maximum, so you decide to go from having a £50 excess up to £750.
• However, depending on the terms of your policy, once you increase your excess, you can only decrease it by one or two brackets. In this scenario, when you come to renew again, you could lower it from £750 to £500 or £350. You may not be able to go from the maximum excess (£750) to the minimum (in this example, £50).

Do I have to pay a health insurance excess?

If you choose a policy with a £0 excess, then you won't have an excess to pay, but your premium is likely to be higher as a result. Remember, the higher the excess, the lower your overall premium and vice versa.

Are there times when excess does not need to be paid?

There are a handful of circumstances where you won't need to pay a health insurance excess, but this should be clearly set out in your policy terms.

Broadly, the only claims you won't need to pay an excess are cash benefit claims. These are events that your policy pays you for, for instance, if you choose to have treatment through the NHS instead of privately (known as an NHS cash benefit). Some policies also provide a cash payout if you have a child (childbirth cash benefit).  

Is it worth paying an excess for private health insurance?

Paying an excess can help lower your monthly private health insurance premium. Nevertheless, the excess amount you choose will need to be affordable as you'll be expected to pay it in order to access treatment.

If you're considering what level of excess to pay, don't forget to check how the excess is applied as this can affect your overall costs. For example, whether it's payable just once for the policy term (typically 12 months) or per claim.  

Of course, whether or not private health insurance is right for you in the first place will depend on your circumstances, but having a policy can mean you avoid lengthy waiting lists. Not only that, depending on the cover you choose, you could also benefit from a host of other features including access to a GP 24/7, mental health support and physiotherapy. Some providers offer lifestyle benefits too, such as discounted gym memberships.

If you're weighing up the pros and cons of private health insurance, our in-depth guides can help. You can also compare policies right now or contact us and we'll put you in touch with a regulated broker who can provide you with tailored advice.