In Australia, the term ‘co-payment’ is commonly used in the context of health insurance and Medicare, but not everyone knows what this term actually means. In simple terms, a co-payment is an additional out-of-pocket payment which is required before you can make a claim on your hospital cover policy.
Savvy can help you unravel the complexities of health insurance co-payments so you can better understand how you’re spending your health dollar. Find out all the information you need about co-payments here with us today.
What are health insurance co-payments?
When it comes to private health insurance, a co-payment is an additional out-of-pocket payment which may be required when submitting a claim relating to a hospital admission on a hospital cover policy. This co-payment is entirely different from the excess amount, which may also have to be paid when making a claim. However, the excess you pay when making a claim is sometimes referred to as a co-payment.
A hospital cover co-payment is usually based on the number of nights you remain in hospital and is often charged per night. It can range from $50 to $100 or more per night. For example, if the co-payment is $100 per night and you remain in hospital for two nights, your co-payment would be $200.
Some policies have a cap on the total amount of co-payment which has to be made per financial year. For example, the co-payment may be capped at $500 per year regardless of how many times you’re admitted or how many nights you stay in hospital.
Unlike a co-payment, which will vary according to the length of your hospital stay, an excess is a fixed amount which you can agree to pay when you buy your hospital cover policy. It can range from zero up to $750 for singles and $1,500 for family policy owners.
Are a ‘daily charge’ and a ‘co-payment’ the same thing?
Yes – some health funds have chosen not to use the term co-payment, and instead have introduced a ‘daily charge’ for each day that you remain in hospital. However, in effect, these amount to the same thing, as each is an additional out-of-pocket charge per day that you’re admitted to hospital.
How can I avoid paying a health insurance co-payment?
You can avoid paying hospital cover co-payments by comparing policies carefully and selecting a policy which states it has no co-payments for hospital admissions or allows you to select a no-co-payment option.
However, hospital cover policies that don’t have co-payments can cost more than those that do, as it means a greater portion of the financial burden rests on the insurer. In the same way increasing your excess can reduce your hospital cover premiums, opting for a co-payment (or greater co-payment) could lead to cheaper overall premiums.
By comparing health insurance policies, you’ll be able to see which health funds do charge co-payments and which offer policies with ‘no co-payment' options if you wish to avoid this charge.
