What is excess in health insurance? In simple terms excess payment means the amount of money that you will be paying out on your medical insurance before the health insurance kicks in. This is designed to balance out the annual cost of health insurance for you. It means that if you are unfortunate enough to become ill and need medical treatment your excess payment will reflect this saving as opposed to the premiums being paid by you. This can work well if you have a particularly expensive illness or are otherwise at a higher risk than other policy holders.
You may have heard the term surplus payment before but may not know what it implies. Your policy is often set up so that when you need treatment you can choose to make an excess payment towards the costs. These payments are then taken out of your regular income tax payments. This means that you will have more of your income available to go towards the cost of your medical treatment.
When should you make a surplus payment? The main time to make a surplus payment is after illness has hit you hard. If you have been ill for a long period of time or have had a serious accident, you could find yourself paying over the odds for your policy. However, it does depend on how your policy is designed. You should check your policy for any flexibility that might allow you to make a larger excess payment if you have fallen ill during the year.
Your next consideration is how much excess you are asked to pay towards your premiums. There is a maximum amount of excess that you are required to pay. It will vary between individual policies. This is known as the Annual excess payment. It is usually set at a figure determined by the insurer.
However, the higher your annual excess amount is the more you might end up paying out-of-pocket. This means that the more money you save, the more you are able to reduce your premium. There is also a discount scheme whereby if you are fit and healthy, you can save money by up to five per cent. It is possible to save hundreds of dollars per year when you take up excess.
The amount that you are asked to pay towards each month’s premiums will be based on the average age of those who are covered. The age of the policyholder is taken into account, but it is important to remember that there is always a ceiling amount which may apply. It is best to read the small print of any policy you consider taking out.
The amount of excess is taken from the monthly premiums. There are options where you may choose how much excess you would like to have towards your monthly premium. If you choose a higher excess amount then you will have less money in the event that you need to make a claim. However, it is important to remember that if you choose a lower excess amount, then you may have to pay more towards any claims that you do make.
Some people want to know what is excess in health insurance, but do not feel comfortable having to read the small print of their policy. If this is the case for you then you can always try an online excess payment calculator. This tool will help you work out how much excess you would have to pay and how many days the policy will last. You can then find out how long you will have to pay before the policy ends.