What Is Excess in Health Insurance? How It Works in Ireland

In health insurance, the excess is the upfront amount your employees pay for medical treatment or hospital visits before their insurer steps in to cover the rest.

How does excess impact what your employees pay after an accident or illness?

Does it affect their premiums?

We’ll break down what excess means in insurance, so you can confidently explain it to your team and help them better understand their health coverage.

Note: While this article focuses on health insurance excess, the concept applies similarly across other types of insurance.

Further Reading

• Are you a small business owner in Ireland? Explore Small Business Health Insurance and how it can help you.

• Learn what Lifetime Community Rating is and how it impacts your team’s health insurance costs.

What Does Excess Mean in Health Insurance Ireland?

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.

As an employer, it's a fixed amount specified in your employees' insurance policy that directly affects how much they pay when making a health insurance claim.

For example:

Suppose your employee has a health plan with a €150 inpatient policy excess.

They end up in the hospital, and the bill is €5,000. They'll first need to pay €150, and then their insurer covers the rest, €4,850.

But why do your employees need to pay an excess if they have health insurance?

We get you!

After all, the whole point of health insurance is to cover your employees’ 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 handle more significant, long-term medical treatments efficiently.

This can translate into lower premiums for a policyholder, as it helps keep the insurer's overall costs down.

Inform your employees to refer to their health insurance policy documents for specific excess amounts and any applicable exclusions.

Wondering how long it takes for your employees to get covered?

Learn about the Waiting Period for Health Insurance in Ireland.

Types of Excess in Irish Health Insurance Your Employees Must Know

Understanding the different types of excess in health insurance helps your employees make informed decisions about policy selection and claims.

In Ireland, health insurance excess falls into the following categories:

A. Compulsory vs Voluntary Excess

• Compulsory Excess is a fixed amount your employees must pay on any claim. Their insurer sets this amount.

• Voluntary Excess is an additional amount your employees may choose to pay, which can lower their premiums.

B. Inpatient vs Outpatient Excess

• Inpatient excess covers hospital admissions (applicable for private and hi-tech hospitals), such as overnight stays, surgery, and procedures. Your employees pay inpatient excess directly to the hospital for each claim.

• Outpatient excess covers medical services your employees 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, employees pay their outpatient excess amount first. If the full appointment fee is reimbursable through their policy, they can claim back some or all of the excess costs from their insurer later.

How Excess Works: Understanding Employee Role and Choices

Learning how insurance excess works can help your employees manage their healthcare costs effectively.

Here's a quick breakdown:

A. Setting the Excess Amount

Irish insurers often offer a range of excess levels, allowing your employees to customise their coverage based on their needs and budget.

For instance, Irish Life Health’s Kickoff plan is subject to a €125 excess per person for certain benefits. The excess amount goes up to €250 per person in the insurer's BeneFit plan.

This flexibility empowers your employees to choose the right balance between premium and out-of-pocket costs.

If you’re offering company-funded private health insurance in Ireland, ensure employees understand their options before selecting a plan. In these cases, the chosen excess amount directly impacts the premiums you pay and your overall financial planning.

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B. Strategic Considerations for Your Employees

Before choosing an excess level, your employees should consider the following:

• Insurance risk assessment: Ask your employees to analyse their expected healthcare expenses. If they anticipate frequent visits to doctors or specialists, a lower excess might be more beneficial.

• Balancing excess with premium: A higher excess reduces your employees’ premium but increases their out-of-pocket costs for claims. Your employees should choose a level they can comfortably afford.

Some Irish insurers also offer ‘nil excess’ plans, meaning your employees must pay higher premiums. Besides, the excess applies to each claim, not their annual spending. So, multiple services could mean multiple excess payments.

C. Claim Processing with Excess

If your employees need to file a claim on their health insurance that includes excess, here's the best approach they can take:

• Initial Steps: Check their policy details to understand the excess applicable.

• Gather Their Docs: Required documents typically include medical reports, bills, and proof of treatment. Your employees must ensure all relevant documents are accurate and complete.

• Claim Filing: Notify their insurer and submit the necessary documents.

• Assessment of Excess: Insurers determine the excess based on your employees’ policy's terms. This could be a fixed amount or vary depending on the claim type.

• Calculating Their Contribution: Your employees can subtract the excess amount from their total claim to determine their out-of-pocket expenses. For example, if the claim is €1,000 and the excess is €200, your employee will pay €200, and their insurer will cover the remaining €800.

6 Common Misconceptions About Insurance Excess

Let’s bust some myths about excess in insurance:

Misconception 1: Excess Is an Additional fee Charged by Insurance Companies

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.

Misconception 2: Excess Amount Is the Same Across All Insurance Policies

Reality: The amount of excess your employees pay 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.

However, in a car insurance policy, a higher excess could apply for luxury vehicles or higher risk groups, like drivers with a history of accidents.

Misconception 3: Excess Applies to All Types of Claims

Reality: This depends on the policy.

Some insurance policies may have certain types of claims or situations where excess does not apply. Your employees must check their policy details to understand when excess is applicable.

Misconception 4: A Higher Excess Always Leads to Much Lower Premiums

Reality: While choosing a higher excess can lower your employees’ 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.

Misconception 5: Once the Excess Is Paid, Everything Else Is Covered

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.

Misconception 6: Excess Payment Is Refundable

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 your employees to claim back a portion of the excess amount they paid, especially in outpatient claims.

5 FAQs About Excess in Insurance in Ireland

We’ll tackle some common questions you or your may have about insurance excess so you can guide them effectively:

1. What Is Shortfall? How Is It Different From Excess?

A shortfall occurs when the total cost of treatment exceeds what your employees' insurance covers, leaving them to pay the difference.

Excess, on the other hand, is a fixed amount your employees pay upfront per claim or hospital stay before insurance coverage kicks in.

For example:

If a treatment costs €1,000 and the policy includes:

• €50 inpatient excess
• €900 coverage limit

Your employee would pay the €50 excess upfront to the hospital. The insurer would cover €900, leaving a €50 shortfall (€1,000 - €900 - €50 excess) that the employee must also pay.

2. How Is Excess Different from Co-Payment?

A co-payment is a fixed amount your employees contribute toward specific health services or procedures, sharing the cost with their insurer. Each time they use these services, the co-payment is paid 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.

For example:

If your employee’s health insurance policy includes a €1,500 co-payment for a cataract surgery, they 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.

3. Does Excess Apply to Public Health Insurance in Ireland?

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.

4. How Does Excess Apply to Other Types of Insurance?

The concept of excess extends beyond health insurance, applying to various other types of insurance policies.

These include:

• Travel insurance: In travel insurance, the excess is the amount your employees pay towards a claim for things like lost luggage or medical expenses abroad before their insurer covers the rest.

• Home insurance: For home insurance, the excess is the initial amount your employees 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 your employees pay out-of-pocket in case of an accident or damage claim before the insurance company steps in to cover the remaining costs.

5. What Is No-Claim Bonus and How Does Excess Impact It?

A no-claim bonus (NCB) is a discount insurers offer for each year your employees don't make a claim, rewarding the time they 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.

Simplifying Health Insurance Excess for Your Team

Understanding how excess works in Irish health insurance can help your employees avoid unexpected costs and make informed decisions about their coverage.

Clearly explain terms like excess, shortfall, and co-payment to reduce confusion, build trust, and support your team's well-being. Empowering your staff with this knowledge ensures they feel confident using their health benefits effectively.