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Understanding your Health Insurance Excess 2022

understanding excess 1
Megan Fraser Updated: 19 April 2022
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Worried about your health insurance excess? You’re not alone. Many people find the concept of an insurance excess difficult to understand, but it’s important to know what your policy covers – and doesn’t cover – in case of a medical emergency.

That’s why we’ve put together this guide to health insurance excesses, which explains everything you need to know about this important part of your hospital cover. With this information, you can make informed decisions about your health and feel confident that you have the best possible coverage in case of an emergency.

Key facts

  • Excess is a decided amount that you have to pay out-of-pocket when going into hospital.
  • Excess is only applicable for in-hospital treatments and hospital excess, but does not apply for daylight surgeries.
  • Your premium will be lower the higher your excess amount.
  • There is a variety of excess costs on offer, but the most common excess cost is $500.

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What is a health insurance excess?

An insurance excess is the amount of money you have to pay when making a claim with your private healthcare provider. Your excess is the amount you have to pay for private healthcare insurance. It’s decided when entering into a contract with your provider, and can be as high or low depending on what kind of coverage meets your needs best.

How does excess work?

The amount that is spent on claims in case of emergencies or accidents will be covered by your insurer, with the balance being paid out-of-pocket up front. This can vary depending on what kind of plan suits each person’s needs. Some health insurance plans have caps on what you pay, meaning one claim per year could be all it takes to max out your account. 

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The difference between excess and copayment

The excess and co-payment options are two ways that you can lower your health insurance premium. In both cases, an out of pocket payment will be required for hospital admittance in exchange for a reduced up front cost with no monthly bills associated.

Money you pay for overall hospital treatmentMoney you pay for every day you are in hospital, up to an agreed amount
If your excess is $500, you have to pay that amount plus anything else not covered by health insuranceIf your copayment amount is $50, you have to only pay $50 for every day you spend in hospital

Choosing a private health insurance excess

When it comes to your health insurance, you should know a few things. First off- depending on the plan that suits you best and what type of hospital visits/services is covered by said coverage – may have an excess. The more you agree to pay in hospital bills, the lower your premiums will be. Your health fund rewards you by giving out lower rates of insurance coverage for yourself. 

Pros and cons of a higher excess

The idea that you’re agreeing to pay a certain amount of money if the hospital treats your illness came about as an attempt at reducing monthly premiums. The more times you visit a private hospital in one year, the less each visit will cost thanks to this great feature. However, it’s not all positive. Below are the pros and cons to having high excess balance:


  • The higher your excess balance is, the lower your premiums will be.
  • Excess is only paid if you’re admitted to hospital.
  • Generally speaking, you won’t have to pay an excess for surgery that is performed on the same-day, even with a lower premium.


  • You may have to pay an additional daily amount for your hospital stay.
  • If you decide on an excess that is over $750, you probably still have to pay the Medicare Levy Surcharge.
  • If you’re admitted to hospital and cannot afford to pay your excess, you may not receive any coverage at all.

How much is a health insurance excess

Health insurance has many different features. With some plans there are multiple options for excesses. Higher excess results in lower monthly premiums because these extra fees were paid upfront when buying coverage. The excesses range from $0 to 1000 depending on the policy. With some insurers you can choose between a number of options. Usually, customers choose between $250 to $500 in excess costs.

When don’t you pay an excess?

There are a few instances where excess does not apply. Remember that once you’ve paid your excess, even if it’s after overnight or same day surgery, you will never have to pay it again for that calendar year. Certain situations where you do not need to pay excess includes daylight surgeries and accidents. 

Below are the circumstances in which you will not have to pay any excess:

Child dependents

Even though there are no limits to what kind of insurance you can get, some health care plans don’t offer any excess for kids when they’re covered under a family or single parent hospital cover. Health funds are known to offer family cover with incentives that reduce the excess for children being treated in hospital. They’ll continue providing dependent kid’s healthcare until they reach at least 21 years old, if not older. 

Day surgeries

Many insurers won’t charge an extra fee if the only reason why surgery was necessary is because he/she went into hospital during day time hours – this includes cases where there’s not enough room at night journals.

Accidental injuries

Most health insurance policies have a “waiver of all or portions” if you’re involved in an accident.

Save on your health insurance excess

Taking out excess of your health insurance premium and coverage can help you save money. When you decide on your excess, you will experience either a slight or heavy decrease on your monthly premium cost. However, there are also ways you can save money on your excess amount as a whole. The most important step to take when trying to save money on your excess is to receive quotes on numerous premiums, excess amounts, and coverage levels from multiple insurers. Remember to review and compare these quotes to choose the best one for your individual health care and budget requirements. 

Frequently asked questions and answers

  • Is it better to have high or low excess?

    Paying less in premiums can help you save money on your health insurance premium. But be aware that if something does go wrong and hospital care is needed, there will likely need to be an excess payment made upfront before any covered services are provided by them (or their providers). The more you pay towards your own healthcare, the less of an expense it becomes for others. When choosing between a lower excess and no extra costs at all there’s always that option where health funds will have to cover some expenses themselves which means they can charge higher premiums than otherwise possible.
  • Do you pay an excess on Extras cover?

    No, there is no excess on Extras only cover. Hospital treatment is all you need to pay for. You cannot apply an excess towards your extras insurance, so services like dental checkups and physiotherapy appointments will not be covered by paying a percentage of their cost in advance. Remember that excess only needs to be paid once during the entire calendar year. Once your access has been paid, you won’t have to worry about it again.
  • Do you pay hospital excess for same-day surgery?

    Health insurers often won’t charge you an excess if the only reason why your visit to hospital was for day surgery. It’s also common that health funds will waiver any related expenses, such as those due accident-related treatment or same day admissions. In addition, you will not have to pay any excess if the treatment or surgery is performed on your child who is your dependent.
  • Which is the most common excess?

    When it comes to hospital cover, there are many options available for you to choose from.The most common excess amounts are $250, 500 or 750. These vary depending on your age and how long you’ve been with the same insurer, as well as your budget and reason for choosing an excess. Remember that the higher your excess amount, the lower your monthly and yearly premium will be.

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