How does excess work on health insurance?

The excess on a health insurance policy is the amount the policyholder pays towards the cost of treatment when making an eligible claim. The insurer pays the rest of the claim, in line with the limits and other terms of the policy.

The amount varies, but you can usually choose the excess you want, often from £100 up to £1,000. A higher excess brings your premium down, because you agree to pay part of your treatment costs when you claim.

In this article, we explain how health insurance excesses work and how they could affect you.

What does excess mean in health insurance?

An excess is the amount the policyholder pays towards a claim. It is agreed when you first buy your policy or at renewal. How it is applied depends on the terms of your policy, and can vary between insurers.

Typically, an excess applies once to each insured person in each period of insurance, at the start of their first eligible claim. For example, if two people on the same policy each make a claim in the same year, they both pay an excess. If either of them claims again in that year, they do not pay another excess until the next period of insurance.

With some policies, an excess applies to every claim. This means each insured person pays an excess at the start of each claim.

Read your policy terms carefully, so you understand how your excess is applied.

How does a health insurance excess work?

When you make an eligible claim, you pay the excess towards your treatment. Your insurer then pays the rest, up to the policy limit.

Here are some examples of how an excess works when it applies once to each insured person in each period of insurance:

• If you have a £200 excess and claim for £1,000, your insurer pays £800.
• If you have a £200 excess and claim for £200, you pay the full cost of the claim through your excess.
• If you have a £200 excess and claim for £100, you pay the full cost of the claim. You still have £100 of your excess left to pay, so the next time you claim in that period, your remaining excess is £100.

Is a health insurance excess compulsory?

Some health insurance policies have a compulsory excess set by the insurer. You cannot remove it, and you pay it when you claim.

On top of a compulsory excess, you may be able to add a voluntary excess to lower your premium.

How much is a health insurance excess?

The amount depends on the insurer, the policy and your preference. With a voluntary excess, you can usually choose an amount from £100 to £1,000. With a compulsory excess, the insurer sets the amount.

Can you change your health insurance excess?

You may be able to change your voluntary excess when your policy renews, depending on the insurer and its terms. You cannot opt out of a compulsory excess that the insurer has added to your policy.

What happens when you change your excess?

A higher excess lowers your premium, but you pay more when you claim. A lower excess means a higher premium, but you pay less when you claim.

How is a health insurance excess paid?

How you pay depends on your policy and the type of claim. Sometimes you pay the excess directly to the hospital or specialist, and your insurer pays the rest of the bill, in line with your policy limits.

At other times, you may pay the whole bill yourself, and your insurer pays you back the cost minus the excess, in line with your benefit limits.

What are the benefits of a health insurance excess?

Terms differ between insurers and policies, but adding an excess can have advantages.

For individuals and families, an excess means a lower premium, whether you pay monthly or annually. If you do not claim during the policy year, you do not pay the excess at all.

For employers, an excess on a group scheme may discourage frequent small claims, which could otherwise lead to higher premiums at renewal.

How does excess work with Freedom Health Insurance?

With Freedom Essentials, a compulsory £100 excess applies to every policy. You can add a voluntary excess of £100, £250, £500 or £1,000 on top. The excess applies once to each insured person in each period of insurance, and is deducted from the cash benefit we pay you.

With Freedom Elite, you can choose to have no excess, or add a voluntary excess of £100, £250, £500 or £1,000. The excess applies to each insured person for each period of insurance, unless your policy says otherwise. If you add the optional dental, optical and private GP cover, a separate compulsory £50 excess applies to that cover.

Freedom Worldwide offers a range of voluntary excess options. Your intermediary can explain them.

Read more about what affects the cost of health insurance. Full details of how the excess works are in your Guide to Cover or policy document, which you can find in the Freedom Health Insurance Claims Portal.