Putting members’ health before profit

What is Excess in Health Insurance and How Do You Choose?

When taking out a private health insurance policy, it’s important to know the right terminology so you can avoid unexpected bills and prepare for the expected ones. 

One word you might hear a lot that many don’t fully understand is ‘hospital excess’. This refers to the amount of money you agree to pay out of pocket before your insurance pays the remainder of the costs..

Here, we’ll break down hospital excess in a way that is easier to understand so you can make better informed choices about your insurance. We’ll explain when you may need to pay it, how much it might be, and why sometimes paying more or less can make more sense.

What is the Excess? 

Hospital excess is an upfront payment that you must pay before being admitted to hospital as a private patient to receive care.

When choosing your private health insurance policy, you’ll also choose your excess amount. Generally, the higher the excess you choose, the lower your hospital cover premiums will be.

When Do You Have to Pay Hospital Excess?

You’ll only have to pay an excess if you’re admitted to the hospital as a private patient. Hospital policy states that you need to pay the excess upfront before you can receive treatment. 

While Medicare may assist Australian residents with some costs, your hospital insurance will also contribute, depending on your policy.

How often you need to pay this excess during a calendar year depends on your specific coverage.

Frequency of Excess Payments

1. First Admission in a Calendar Year 

The excess you select applies to your initial overnight hospital stay or day admission within each calendar year. Once you’ve paid this initial excess, you may not need to pay it again for additional hospitalisations in the same year, depending on your policy.

2.  Dependents under 25 

If your membership covers dependents under 25, they may not be required to pay any excess when they go to the hospital, depending on your policy.

3. Day Admission

Depending on your hospital coverage level, you may either pay no excess or a significantly reduced one for day admissions. Day admissions involve hospital stays without overnight accommodation.

4.  Multiple Day Admissions

 Some hospital covers include a day admission excess, and if you have several day admissions in a calendar year, you’ll only need to pay the day surgery excess until you reach your total excess limit.

5. Changing Your Cover

If you decide to switch from a health insurance plan with a higher excess to one with a lower excess, this is considered an upgrade. In this case, you might have to continue paying your previous higher excess until you’ve fulfilled the waiting period for the new, lower-level excess.

Understanding these rules and scenarios related to hospital excess payments is essential for making informed decisions about your health insurance. With this knowledge, you can better anticipate potential healthcare expenses and choose the most suitable coverage for your needs.

When Don’t You Have to Pay Excess?

Understanding the circumstances where you’re exempt from paying hospital excess in your health insurance is just as important as comprehending when you do have to pay. 

Here’s a breakdown of situations where you won’t need to pay excess:

1.One Excess Per Person, Per Year 

If you claim on your hospital cover, many insurers will only ask you to pay one excess per person per calendar year, twice on family cover – but be sure to check your chosen policy. Subsequent claims on your health insurance policy within the same year won’t require another payment.

2. Accident-Related Treatment 

Hospitalisation due to accidents often comes without an excess requirement. Most insurers will waive the excess if you’re hospitalised because of an accident.

3. Dependents Under Age 25 

For dependents under the age of 25 covered by your policy, you may not have to pay an excess, depending on your policy. This provides added financial relief for families.

4. Day Surgery 

Many insurers won’t charge a health insurance excess if you require hospitalisation solely for day surgery. This means no excess payment for procedures that don’t involve an overnight stay.

5. Child Dependents on Family Cover 

Most health funds encourage family coverage by waiving the excess for receiving hospital treatment. Additionally, they often extend coverage for dependent children until they reach at least 21 years of age.

In these scenarios, you can breathe easy knowing that the burden of paying hospital excess is alleviated. These exemptions are designed to make private healthcare more accessible and affordable for individuals and families alike.

Understanding when you don’t have to pay an excess empowers you to make informed decisions about your health insurance coverage. It ensures you understand how your policy provides financial relief during medical emergencies, ultimately contributing to your peace of mind and well-being.

 How Much Do You Have to Pay?

The cost of your hospital excess is determined by your specific circumstances.

Australian residents can choose an excess of up to $750 per person. For family or couples cover, you’ll typically be able to choose up to $1,500.


This flexibility in choosing your excess was introduced on April 1, 2019, allowing insurers to offer a maximum excess of $750 for singles (up from $500) and $1,500 for couples and families (up from $1,000). Understanding these options and their financial implications is essential when deciding on your hospital excess.

What Are the Advantages of Paying a Higher Excess?

There are several advantages to choosing a higher excess, including:

  • Lower premiums in exchange for higher upfront costs.
  • You only pay your excess if you require hospital admission.
  • Often, there is no excess payment required for same-day surgery, despite lower premiums.

Opting for a higher excess with your hospital insurance policy means paying lower premiums. Agreeing to cover a larger portion of your hospital expenses can reduce your premium payments. 

While there’s no way to predict hospital visits, having savings to cover the excess can provide peace of mind.

Considering a higher excess can be a wise choice if you fit into one of the following categories:

  • Are young and in good health
  • Have never experienced a hospital stay
  • You believe it’s unlikely you’ll require hospitalisation
  • You can comfortably cover the full cost upfront in case of a claim

When should you choose to pay a lower excess?

Sometimes, opting for a lower excess can be the right move. Here are instances where a lower excess might be more suitable:

History of Health Concerns: A lower excess can ease the financial burden if you have a track record of health issues.

Past Hospital Claims: Multiple previous hospital claims may indicate that a lower excess is practical.

Anticipating Future Hospitalisation: If you anticipate the need for hospitalisation in the future, a lower excess may be a wise choice.

Limited Financial Reserves: If you lack savings to cover a higher excess in the event of a claim, a lower excess can provide security.

Reducing your excess can mean higher premiums, but results in lower upfront costs if you’re hospitalised. Remember that lowering your excess is considered an upgrade, and waiting periods may apply. Your previous higher excess will still apply during this waiting period.

Ultimately, your choice should revolve around whether you can comfortably handle the cost of your excess if hospitalisation becomes necessary.

It’s important to pick a plan that suits your budget and health. Contact us today for more guidance or clarity and to learn more about our member funds. We’re here to help and answer any questions you might have.

Members Health is the peak industry body for an alliance of 25 health funds that are not-for-profit or part of a member-owned group, regional or community-based. They all share the common ethic of putting their members’ health before profit. Our funds represent the interests of more than 5 million Australians.