January 4, 2024
Don't get ambushed by excess on your insurance claims! We detail how excess impacts your Irish health insurance claims & premiums, bust myths & answer FAQs.
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Ever wondered why your health insurance doesn't cover all costs upfront?
Enter the concept of 'excess' in insurance, a crucial term that's often misunderstood.
Simply put: Excess is an upfront amount you pay for medical treatment or hospital visits before your insurer steps in to cover the rest.
How does excess influence what you pay following an accident or illness?
Does it affect your premium payments?
We’ll demystify this insurance jargon for you.
Note: We focus on excess in health insurance in this blog, but it also applies similarly to other insurance types.
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Excess, also known as a deductible, is a pre-agreed amount that the policyholder must pay out-of-pocket before the insurance company covers the rest of the claim.
It's a fixed amount specified in your insurance policy that directly affects how much you pay when making a health insurance claim.
Suppose you have a health plan with a €150 inpatient policy excess.
You end up in the hospital, and the bill comes to €5,000. You'll first need to pay €150, and then your insurer swoops in with the rest, covering €4,850.
But why do you need to pay an excess if you have health insurance?
We get you! After all, the whole point of health insurance is to cover your treatment costs.
Here's the deal:
Excess in health insurance plays a crucial role in how insurance companies manage claims.
By introducing an excess, insurers pay less for frequent, smaller claims. This saves the insurance company money and allows them to efficiently handle more significant, long-term medical treatments.
For a policyholder, this can translate into lower premiums, as it helps keep the overall costs down for the insurer.
Refer to your health insurance policy document for specific excess amounts and any exclusions that might apply.
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Understanding the different types of excess in health insurance helps you make informed decisions about policy selection and claims.
In Ireland, health insurance excess falls into the following categories:
Compulsory Excess is a fixed amount you must pay on any claim. Your insurer sets this amount.
Voluntary Excess is an additional amount you choose to pay, which can lower your premiums.
Inpatient excess covers hospital admissions (applicable for private and hi-tech hospitals), such as overnight stays, surgery, and procedures. You pay inpatient excess directly to the hospital for each claim.
Outpatient excess covers medical services you receive without getting admitted to a hospital. This includes visits to health providers like consultants, general practitioners (GPs), physiotherapists, speech therapists, osteopaths and more. With each visit, you pay your outpatient excess amount first. If the full appointment fee is reimbursable through your policy, you can claim back some or all of the excess costs from your insurer later.
Learning how excess works helps manage your healthcare costs effectively.
Here's a quick breakdown:
Irish insurers often offer a range of excess levels, allowing you to customise your coverage based on your needs and budget.
This flexibility empowers you to choose the right balance between premium and out-of-pocket costs.
If you’re getting company-funded private health insurance, discuss your options with the employer before joining a plan. In such scenarios, the excess amount directly affects the premium they pay on your behalf and, ultimately, their overall finances.
Are you an employer looking to offer private health insurance to your Irish team?
You’ll need to strike a delicate balance between your budget and employee satisfaction (remember, a lower premium for you could mean higher out-of-pocket costs for the employee.)
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Before choosing an excess level, consider the following:
Insurance risk assessment: Analyse your expected healthcare expenses. If you anticipate frequent visits to doctors or specialists, a lower excess might be more beneficial.
Balancing excess with premium: A higher excess reduces your premium but increases your out-of-pocket costs for claims. Choose a level you can comfortably afford.
Some Irish insurers also offer ‘nil excess’ plans, which means you’ll have to pay higher premiums. Besides, the excess applies to each claim individually, not your annual spending. So, multiple services could mean multiple excess payments.
If you need to file a claim on your health insurance that includes excess, here's the best approach to take:
Initial Steps: Check your policy details to understand the excess applicable.
Gather Your Docs: Required documents typically include medical reports, bills, and proof of treatment. Ensure all relevant documents are accurate and complete.
Claim Filing: Notify your insurer and submit the necessary documents.
Assessment of Excess: Insurers determine the excess based on your policy's terms. This could be a fixed amount or vary depending on the claim type.
Calculating Your Contribution: Subtract the excess amount from the total claim to determine your out-of-pocket expenses. For example, if the claim is €1,000 and your excess is €200, you pay €200, and your insurer covers the remaining €800.
As mentioned earlier, excess is often misunderstood, giving rise to many misconceptions.
So, let’s bust some myths about insurance excess:
Reality: Excess is not an extra fee but a part of the claim cost the policyholder agrees to pay.
It's a fixed amount set in the policy and is known upfront, not an additional charge added at the time of a claim.
Reality: The amount of excess can vary significantly between insurance policies and providers.
The different excess amounts are tailored based on the type of insurance, the level of risk, and other factors.
For example, excess in health insurance could be influenced by the range of medical services covered and the policyholder's health profile. But in a car insurance policy, a higher excess could apply for luxury vehicles or higher risk groups, like drivers with a history of accidents.
Reality: This depends on the policy.
Some insurance policies may have certain types of claims or situations where excess does not apply. You must check your policy details to understand when excess is applicable.
Reality: While choosing a higher excess can lower your insurance premiums, the reduction in premiums is not always proportional to the increase in excess.
The overall impact varies based on the type of insurance and the insurance provider's policies.
Reality: Paying the excess does not guarantee the insurer will cover all the remaining costs.
Coverage is subject to policy terms, including any limits, exclusions, or conditions.
Reality: The excess amount paid towards a claim is generally not refundable. It's the policyholder's contribution to the claim as agreed in the policy terms.
That said, some insurance contracts allow you to claim back a portion of the excess amount you paid, especially in outpatient claims.
We’ll tackle some common questions on insurance excess:
The shortfall comes into play when the total cost exceeds what your insurance covers, requiring you to pay the difference.
It differs from excess, which is a fixed amount you pay per claim or hospital stay.
If your treatment costs €1,000 and your policy has a €50 inpatient excess with a coverage limit of €900, you first pay the €50 excess directly to the hospital.
Then, since your insurance covers only up to €900, there's a shortfall of €50 (€1,000 total cost minus €950 covered by insurance and excess), which you also need to pay.
A co-payment is a fixed amount you contribute towards the cost of specific health services or procedures, sharing the expense with your insurer. Each time you use these services, you pay the co-payment directly to the provider or hospital.
Unlike excess, which is a one-time payment per claim or policy year, co-payment is a recurring fee paid directly to the service provider or hospital and is not reimbursable.
If your health insurance policy includes a €1,500 co-payment for a cataract surgery, you must pay €1,500 directly to the hospital. This co-payment is separate from any excess or outpatient claim costs and is not included in these calculations.
In Ireland, excess does not apply to public health insurance.
Public health insurance in Ireland is primarily managed through the Health Service Executive (HSE) and is funded by general taxation.
The concept of excess extends beyond health insurance, applying to various other types of insurance policies.
Travel insurance: In travel insurance, the excess is the amount you pay towards a claim for things like lost luggage or medical expenses abroad before your insurer covers the rest.
Home insurance: For home insurance, the excess is the initial amount you contribute towards any claim, such as damage or theft, affecting how much the insurer will reimburse.
Car insurance: In car insurance contracts, the excess is the amount you pay out-of-pocket in case of an accident or damage claim before the insurance company steps in to cover the remaining costs.
A no-claim bonus (NCB) is a discount insurers offer for each year you don't make a claim, rewarding the time you stay healthy and safe.
In Ireland, while NCB is prevalent in car insurance, offering significant premium reductions for claim-free years, it's less common in health insurance.
Excess in your insurance policy can sway insurance costs, requiring you to pay from your pocket for every claim that’s subject to excess. At the same time, its impact on premiums can affect you or your employer, depending on who handles the payments.
So, it warrants careful consideration from both parties.
For employers, it's also essential to prioritise transparency and be proactive in handling queries around excess.
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👋🏻 Hi I'm Aine, Head of Customer Success at Kota. Whether you're a Kota customer, a Kota user, or you're just browsing, I hope to help educate and empower those who want to know more about owning their own benefits, and building financial autonomy 📚
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