How health insurance excess impacts your premium

Chris Stanley

Chris Stanley

Updated 09/01/2024

Health insurance excess can be a tricky concept to grasp. We explain what it is, how it works and how it can help lower your premiums.

How health insurance excess impacts your premium

What is Health Insurance Excess?

Most health insurance providers let you choose how much you pay out-of-pocket when you make a claim on your hospital cover. It’s a similar principal to claiming on your car insurance after an accident

This amount is called health insurance excess. A higher excess can bring your premiums down, but you’ll need to be able to pay this sum when you make a claim. 

Here’s how it works. 

Key Points

  • Choosing a higher level of health insurance excess can mean lower premiums

  • You choose your level of excess when you take out your policy

  • You pay one excess amount per person on the policy each year, if you go to hospital


What is excess in health insurance?

Health insurance excess, or hospital excess, is an amount of money you agree to pay if you go to hospital as a private patient. 

The amount of excess varies between $0 and $1,500, but the more you select to pay, the lower your health insurance premium will be. 

If you choose to be treated as a private patient, then you’ll need to be prepared to pay the excess from your personal savings.

What is the purpose of a health insurance excess?

Health insurance excess gives you a way to lower your health insurance premiums in return for agreeing to pay a certain amount from your savings if you go to hospital. 

Can you claim back excess on health insurance?

No, you can’t claim back any hospital excess payments from your insurer. It’s an agreement between you and your health fund as to how much out-of-pocket excess cost you are willing to cover in exchange for lower premiums.

How often do you pay health insurance excess?

How often you pay your excess depends on your health fund.

With some health funds you’ll only pay the excess for the first hospital admission each year whereas with others  you’ll need to pay the excess every time you are admitted to hospital. 

Not sure how often your chosen fund applies an excess? Compare Club’s specialists can help. We’ll take you through all the excess options.

What is the difference between an excess and a co-payment?

When you sign your policy for hospital cover, most health funds will allow you to set your excess limit and/or your co-payment limit.

Your excess is usually payable upfront when you are admitted to hospital - before your health fund pays any benefits. 

A co-payment is the agreed amount you’ll pay per day when you are in hospital, which usually has an annual limit. 

Depending on your health insurer, this could be $50 per day for a shared or private room as well as day surgery*, but varies between health insurers.

Is it better to have high or low excess?

It depends. It’s up to you whether the trade-off between out-of-pocket excess costs and cheaper premiums is worthwhile. 

For example, if you’re healthy and think you’re unlikely to have to go to hospital, a higher excess can be beneficial since you will be lowering your premiums by agreeing to a fee you probably won’t have to pay. 

On the other hand, if you think you might need surgery or have a condition that may require a hospital visit, setting a lower excess could be more affordable.

Most people set their excess based on what they think they can afford. 

If you can afford the out-of-pocket costs for a hospital visit, then you may be comfortable with a higher excess.

What does no excess mean in health insurance?

No excess means that you don’t pay an excess when you’re admitted to hospital. 

This means your premiums may be higher, but you generally won’t have any out-of-pocket costs for hospital care.

How can I save on private health insurance?

Adjusting your excess is just one of the ways to bring down your premiums, but you’ll need to be ok with paying higher out-of-pocket expenses. 

Before you can set an excess, however, you’ll need to choose a policy that works best for you.

If you’re thinking about switching your hospital cover, you can quickly and easily compare policies with Compare Club by clicking the button below. 

Choosing the right health insurance can also help you save on your tax return.


This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.

*Private Health Ombudsman, Top Hospital Cover with Co-Payments, accessed October 2021.

Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.

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Chris Stanley

Sales & Operations Manager for Health Insurance