Is a $750 excess right for you?

Government reforms to health insurance mean health funds will soon be able to offer customers a $750 excess. If you’re a Medibank member, you may be able to increase your excess, in return for a lower health insurance premium.

While many will welcome the new option of a higher excess to help reduce premiums, it may not be right for everyone. It’s important to consider how frequently you visit hospital and what you’ll need to pay if admitted.

First, your excess explained

An excess is the amount you pay if you’re admitted to hospital — either same-day or overnight — before receiving any benefits from your insurer. Medibank currently offers a number of excess options ranging from $0 to $500, depending on the hospital product.

From 1 April 2019, Medibank will also offer the option of a $750 excess on most of our hospital covers to help reduce your premium.

Keep in mind, on most Medibank policies an excess applies per member, per calendar year and it doesn’t apply to children, students or adult dependants on a family membership.
Here’s what you should consider when deciding which excess is right for you.

Existing medical conditions

As you’ll only be required to pay your excess if you’re admitted to hospital, it’s important to consider your current health needs and whether you have a condition that may require hospital treatment in the near future.

This may be an easier decision for those who have an ongoing health condition or have had a recent diagnosis.

Consider Annabel, 24, who recently injured herself playing netball and according to her specialist, will require a knee reconstruction in the coming months. Given the likelihood she will have to go to hospital soon, and pay an excess, she decides to stay with a lower excess.

On the flipside, if you haven’t been to hospital in a long time, are in great health, have a low-risk lifestyle, and have no existing conditions that may require hospital treatment, you might feel it’s worth paying a higher excess to get a lower premium. And if the need arises and you do go to hospital, you’re prepared to make this higher excess payment.

Is it worth it for me financially?

If a higher excess in return for a lower premium sounds like the right option for you, a few things to ask yourself are:

How much will I save on my premiums each month if I increase my excess to $750? How long will it take me to save the difference between my existing excess and a $750 excess if I am admitted to hospital? And am I likely to go to the hospital within that time-frame?

In answering these questions, you may realise it’s worth prioritising a lower premium in exchange for a higher excess, particularly if you believe the chance of you being admitted to hospital is low.

If you decide to go with a higher excess, you may also want to consider how much money you’ll have on hand if you need to go to hospital - $750 is a large sum to pay at once. If there is a possibility that you won’t have that much money to spare at any given time, it may make more sense for you to go with a lower excess amount.

For more information: contact us online, or over the phone

And remember, when making any change to your cover, check to see if waiting periods apply.

The option of a $750 excess is just one of the health insurance reforms Medibank is rolling out to make it easier to compare hospital products and choose cover that best suits your needs. And we’re giving our customers even more -- find out about the changes we’re making to give members better value, personalised support and more choice.