How an excess works – Private Medical insurance (PMI)

An excess is a common option to consider when looking to purchase a Private Medical Insurance (PMI) policy or if you are looking to reduce your premium at renewal if you already have a policy in place and with excesses ranging from as little as £100 to as high as £5,000 there are lots of options to choose from.

If you decide to apply an excess to your policy or increase it to a higher amount at policy renewal, your health insurer will require you to pay the excess amount selected towards the cost of any treatment. It is important to read the insurer’s terms and conditions as some insurers require the selected excess to be paid per insured person, per claim where others simply require the excess to be paid on the first claim that each insured applicant makes in any policy year, regardless of the number of claims made.

Some individual health insurance plans already incorporate a compulsory excess, which is normally set at £100. To reduce costs further where a compulsory excess applies you can consider selecting a voluntary excess. If you do decide to include a voluntary excess and your policy incorporates a compulsory excess, your voluntary excess will be added to your compulsory excess which would give you the total excess you would pay out in the event of a claim. For example, if you choose a voluntary excess of £250 and a compulsory excess of £100 applies, the total excess you’d pay if you had to claim would be £350, which is why it’s important that you choose an excess you’re comfortable with.

If your first claim on a health insurance policy is for an out-patient treatment and you have selected a reduced out-patient benefit limit, some insurers can deduct the excess amount paid from your out-patient limit before the insurers pay for any monies they owe towards the claim, which, depending on the excess selected, could leave you with very little cover for future out-patient claims for the remainder of that policy year. For example, if you have a £250 excess and a reduced out-patient limit of £500 and your out-patient consultation and diagnostic tests total £350, you would be liable for your excess amount towards the total of that claim (£250), but at the same time the insurer would reduce your £500 reduced out-patient limit by your excess amount, reducing your out-patient limit to £250. Once this has been done they will then deduct the £100 they owe from your out-patient limit which would leave your out-patient limit with only £150 for the rest of the policy year. You wouldn’t have to worry about this example if you select full cover for out-patient treatment.

Remember, Private Medical Insurance is flexible and can be tailored to suit your specific needs and budget, so if you decide that you’d rather not have a policy which includes an excess, there are other ways you can lower your health insurance costs and we would be more than happy to discuss these options with you. Contact us now on 01245 929 129 or email us at enquires@smphelthcare.com.