How Does an Excess Work in Private Health Insurance?

When you take out private health insurance you'll usually be given a variety of different excess options to choose from. It's important to understand exactly how an excess works and the implications it can have for both you and your policy.

We've put together this guide to answer some of the most common health insurance excess questions so you are equipped with the knowledge you need to determine which level of excess is right for you.

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What is an insurance excess?

An insurance excess is the amount you agree to pay towards your treatment if you make a claim on your health insurance policy.

The excess levels available for you to choose from will vary depending on the insurer. Some of the most common excess levels are: £0, £200, £500, £1000, £2,000, £3000 and some insurers even offer excess of up to £5,000.

Why pay an excess?

Choosing to pay an excess gives you a degree of control over your policy premiums (the amount you pay per month or year for your cover). The higher the excess you choose to pay when you make a claim, the lower the cost your cover will be.

Remember to read your policy documents carefully, though. The terms and conditions of an excess will differ from insurer to insurer, and it's important to be aware of and understand what this means for you when it comes to settling your bill.

Your excess level is one of many factors that can affect your premiums—read our handy guide to find out what else can increase or decrease the amount you pay here.

How does an excess work?

Crucially, you will only need to pay an excess when you make a claim on your private health insurance. Your insurance provider will explain how and when to pay your excess when you first make the claim, and will always be hand on to answer any questions you may have.

When it comes to settling the bill, you will be required to pay any excess amount you agreed to when you first took out your plan. Your insurer will then cover the rest providing the costs are within any agreed limits.

More often than not your insurer will require you to pay your excess (if applicable) on your first eligible claim of each membership year. This means you will only need to pay the total amount of your excess once per policy year, even if you make multiple claims for a condition.

Note: if you receive treatment that starts in one membership year and carries on into the next, your excess may be applied twice even though it's technically only one claim.

Some other providers may charge an excess every time you make a claim—be very mindful of this, as it could result in being a far more expensive option for you if you make multiple claims.

Health insurance excess example:

Let's say you agreed to an excess of £250 per policy year, and your treatment has cost £1,000.

  • You would pay: £250
  • Your insurer would pay: £750

As you have paid your total excess amount for the membership year, your insurer will cover the costs of any additional claims in full provided this is within any limits set out within your plan.

How to make a claim on private health insurance

  • See your GP: if you're unwell or suffering from an injury, you should see your GP for advice. They may decide to refer you to a specialist, and if this is the case they will write you a referral letter. It's always best to ask for an open referral letter which means it does not name a hospital or doctor to carry out your treatment. This means you are less restricted when it comes to arranging the location of your treatment.
  • Contact your insurer: if your GP has referred you for private treatment, you should contact your insurer right away to let them know. They'll likely need to ask you a few questions so it's a good idea to have your policy documents and any other supporting information to hand. They will ask your name, policy number and some questions about your symptoms as well. You will also need to send a copy of your GP's referral letter. Your insurer will then assess your claim and determine whether this is covered by your plan. If it is, you may be required to pay your excess amount before you see your specialist.
  • See your specialist: if your insurer accepts your claim you can then see your specialist. Depending on the insurer and plan you have opted for you may need to arrange your treatment directly through your provider. At your first appointment you'll need to give your specialist details such as your claims number and any other documents you have received from your insurer. It's good practice to keep your insurer updated throughout this process, and they will be on hand to give advice and answer any questions you may have.
  • Settling your bill: your insurer will typically settle any bills directly with the hospital or specialist who has treated you though in some cases they may contact you for further information. In any case, your insurer will always let you know whether there is an excess to pay. Once your provider has received the invoice for your treatment they will then cover this (minus any excess you are liable to pay) and will let you know how and when to pay your excess. You may need to pay this upfront before you see your specialist with your insurer settling the rest of the bill later on.

How do I know which excess amount is right for me?

The most important thing to consider when choosing your excess amount is what is affordable for you. Remember, private health insurance is designed to cover unexpected illness and injury. If this does happen you will need to be able to pay your excess fee at relatively short notice so it's important to be realistic about your finances.

Whilst opting for a higher excess amount may seem appealing, given it will reduce your overall premium, you should never put yourself in a position where you would struggle to afford this.