When taking out private health insurance, your premium isn't the only cost you'll need to factor in. Even with a top-tier hospital policy, you'll have out-of-pocket costs, one of which may be a co-payment.
Before signing up for a plan, it's important to understand what a co-payment is, how it works under a hospital cover policy and how it can affect the overall cost of your cover and care.
What is a co-payment in private health insurance?
A co-payment, also known as a daily charge, is a fixed fee you may need to pay under some hospital cover policies for each day you're admitted to hospital as a private patient. This is paid directly to the hospital, on top of your regular premium.
Co-payments typically apply to overnight stays, but some policies charge for same-day admissions.
The amount is the same regardless of the treatment you receive. This means that whether you're admitted for a minor procedure or a more complex operation, the co-payment doesn’t change.
In many cases, co-payments are capped per hospital stay or per year. For example, you might pay $50 per night, up to a maximum of $250 per admission.
Not all policies include a co-payment, and the amount can vary between health funds. You’ll find the exact fee and any caps in the policy’s Product Disclosure Statement (PDS), so it’s worth checking this when comparing your options.
Co-payments only apply to hospital policies. Extras policies have their own cost structure based on benefit limits, which is the maximum amount your insurer will pay towards a service.
How does a co-payment differ from an excess?
A co-payment and an excess are both out-of-pocket costs that can apply to hospital cover policies on top of your premium, but they work in different ways and serve different purposes.
Excess
An excess is a fixed amount you agree to pay when claiming on your policy. It is your contribution towards the cost of a hospital admission and a way of sharing risk with your insurer. It's charged once per hospital admission (no matter the length of your stay) or once per calendar year, depending on the policy. An excess can be up to $750 for singles and up to $1,500 for couples and families.
Co-payment
A co-payment is your contribution towards the cost of your hospital stay, charged per day. It covers accommodation costs such as your bed, nursing care and hospital facilities, rather than the medical treatment itself. The longer your stay, the more you'll pay, up to any cap set by your policy.
A policy may include an excess, a co-payment, both or neither. When comparing options, it’s important to check these additional costs as they can increase your total costs during a hospital stay.
For example, on a five-night hospital stay under a policy with a $500 excess and a $50 per night co-payment, you would pay $500 for the excess plus $250 in co-payments, bringing your total out-of-pocket costs to $750.
How do co-payments affect your premium?
Choosing a hospital policy with a co-payment, or a higher co-payment, will generally lower your premium in the same way that a higher excess does. However, while you’ll pay less upfront, you’ll need to prepare for higher out-of-pocket costs if you’re admitted to hospital.
The best option depends on your circumstances and how you expect to use your cover:
- If you’re young, healthy and unlikely to need hospital treatment, having a co-payment can be a way to keep premiums lower.
- If you have an existing condition or anticipate needing hospital care, a policy with no co-payment may provide better overall value despite the higher premium.
Comparing health insurance policies can help you understand what's available, what it could cost and find the right plan for your situation.
Why compare health insurance policies through Savvy?
Can you avoid paying a co-payment?
Yes, there are several ways to avoid or reduce co-payments:
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Choose a policy without a co-payment
The most straightforward option is to select a hospital cover policy that doesn’t include co-payments. Many policies have this structure, although they typically come with higher premiums.
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Use an agreement hospital
Health funds negotiate agreements with specific hospitals. Being treated at one of these hospitals can reduce or eliminate co-payments. You can find out which hospitals your fund has agreements with by contacting them directly or checking their website.
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Check for hardship support
If you're experiencing financial difficulty, contact your health fund. Many providers have hardship provisions that may allow co-payments to be waived or reduced.
What is a PBS co-payment?
A PBS co-payment is entirely separate from private health insurance co-payments. It refers to the fixed amount Australians pay towards the cost of prescription medicines that are listed under the government-subsidised Pharmaceutical Benefits Scheme (PBS).
As of 1 January 2026, the co-payment amounts are:
- General patients: up to $25.00 per prescription
- Concession card holders: up to $7.70 per prescription
Once your total PBS co-payments reach the annual Safety Net threshold, general patients pay only the concessional rate for further prescriptions for the rest of the calendar year, while concession card holders receive further prescriptions at no charge.
Does private health insurance cover PBS co-payments?
No, private health insurance generally cannot cover PBS-listed medicines or the PBS co-payment itself.
Some extras policies may provide limited benefits for non-PBS prescription medicines that aren’t subsidised by the government. However, these benefits usually come with annual limits, and items like over-the-counter medicines, vitamins and herbal supplements are typically excluded.
Coverage varies between funds and policies, so it’s important to check your PDS or contact your health fund for specific details.
