TL;DR
As an FCA-authorised broker that has arranged over 900,000 policies of various kinds, WeCovr is dedicated to demystifying private medical insurance. This guide explores the crucial differences between excess and co-pay in the UK and international markets, helping you make an informed choice for your health. Comparing the UK approach to patient contributions with international practices Navigating the world of private medical insurance (PMI) can feel like learning a new language.
Key takeaways
- To reduce premiums: By agreeing to share some of the cost, you lower the insurer's potential payout, which in turn reduces the price of your policy.
- To discourage small or frivolous claims: Requiring a patient contribution ensures that policyholders have a financial stake in their healthcare decisions, which can help manage the overall cost of claims for the insurer.
- First Claim (illustrative): In March, you need physiotherapy for a new back injury. The total cost of the treatment is £800. You pay the first £250 directly to the hospital or clinic. Your insurer then pays the remaining £550. Your excess for the year is now fully paid.
- Second Claim (illustrative): In September of the same policy year, you need a consultation with a dermatologist for a new skin condition, costing £400. Because you have already paid your annual excess, your insurer covers the full £400. You pay nothing more.
- Next Policy Year (illustrative): When your policy renews, the excess resets. If you need treatment again, you will have to pay the first £250 of your claim in that new policy year.
As an FCA-authorised broker that has arranged over 900,000 policies of various kinds, WeCovr is dedicated to demystifying private medical insurance. This guide explores the crucial differences between excess and co-pay in the UK and international markets, helping you make an informed choice for your health.
Comparing the UK approach to patient contributions with international practices
Navigating the world of private medical insurance (PMI) can feel like learning a new language. Two terms that often cause confusion are 'excess' and 'co-payment'. While they both refer to the portion of a medical bill you pay yourself, they function very differently.
In the UK, the 'excess' model reigns supreme. Conversely, in many international health insurance markets, such as the United States and the UAE, 'co-payment' (or 'co-pay') is the standard.
Understanding this distinction is vital, whether you're choosing a domestic UK policy or arranging international private medical insurance for life as an expat. This comprehensive guide will break down what each term means, why different systems favour one over the other, and how to decide which structure best suits your personal and financial circumstances.
What Are Patient Contributions in Health Insurance?
Patient contributions are simply the part of your private healthcare costs that you agree to pay out-of-pocket, with the rest being covered by your insurer. Insurers use these mechanisms for two main reasons:
- To reduce premiums: By agreeing to share some of the cost, you lower the insurer's potential payout, which in turn reduces the price of your policy.
- To discourage small or frivolous claims: Requiring a patient contribution ensures that policyholders have a financial stake in their healthcare decisions, which can help manage the overall cost of claims for the insurer.
The two most common forms of contribution are excess and co-payment.
The UK Model: Why is Excess the Standard?
In the UK private health cover market, the excess (sometimes called a deductible) is the default method for patient contributions.
An excess is a fixed amount of money you agree to pay towards the cost of your treatment per policy year or, less commonly, per claim. Once you have paid this amount, your insurer will cover the remaining eligible costs, up to the limits of your policy.
A Critical Point on UK PMI: Before we go further, it's vital to understand a fundamental rule of UK private medical insurance. Standard policies are designed to cover acute conditions that arise after you take out the policy. They do not cover pre-existing conditions (illnesses or injuries you already had) or chronic conditions (long-term illnesses like diabetes, asthma, or hypertension that require ongoing management rather than a cure). PMI is for new, curable health issues.
How Does Excess Work in UK PMI? A Real-Life Example
Let's imagine you have a PMI policy with a £250 excess per policy year. (illustrative estimate)
- First Claim (illustrative): In March, you need physiotherapy for a new back injury. The total cost of the treatment is £800. You pay the first £250 directly to the hospital or clinic. Your insurer then pays the remaining £550. Your excess for the year is now fully paid.
- Second Claim (illustrative): In September of the same policy year, you need a consultation with a dermatologist for a new skin condition, costing £400. Because you have already paid your annual excess, your insurer covers the full £400. You pay nothing more.
- Next Policy Year (illustrative): When your policy renews, the excess resets. If you need treatment again, you will have to pay the first £250 of your claim in that new policy year.
The key takeaway is that with an annual excess, you pay a set amount once per year, regardless of how many claims you make.
Common UK Excess Levels and Their Impact on Premiums
Choosing your excess level is one of the most direct ways to control the cost of your private medical insurance UK premium. The higher your excess, the lower your monthly or annual premium will be.
Here's a table illustrating the typical relationship between excess and premium cost.
| Excess Level | Typical Premium Reduction (Approx.) | Who It's Good For |
|---|---|---|
| £0 | 0% (Base Price) | Those wanting maximum peace of mind and no upfront costs when claiming. |
| £100 | 5-10% | Individuals who want a lower premium but a very manageable excess. |
| £250 | 15-20% | A popular, balanced option for many families and individuals. |
| £500 | 25-35% | Healthy individuals who don't expect to claim often and want significant premium savings. |
| £1,000+ | 40-50%+ | Primarily for those who see PMI as a safety net for major issues and can comfortably afford the high excess. |
Expert Tip: Many people choose an excess of £250 or £500. This provides a good balance between a noticeable premium discount and an amount that won't cause financial hardship if a claim is needed. An expert PMI broker, like WeCovr, can run quotes with different excess levels to show you the exact savings.
The International Model: The Common Use of Co-Payment
Outside the UK, particularly in healthcare systems like the USA, co-payment is a much more common feature of health insurance policies.
A co-payment (or co-pay) is a fixed fee you pay for a specific medical service each time you use it. Unlike an excess, it's not a one-off annual amount. You pay it every time you visit a doctor, fill a prescription, or receive a specific treatment.
How Does Co-Pay Work? An International Example
Imagine you have an international health insurance policy with the following co-pay structure:
- GP Visit: $25 co-pay
- Specialist Consultation: $50 co-pay
- Prescription Drugs: $15 co-pay
Throughout the year, your healthcare usage might look like this:
- You visit a specialist for a consultation. The total bill is $300. You pay your $50 co-pay at the reception desk. The insurer covers the remaining $250.
- The specialist gives you a prescription. You go to the pharmacy. You pay your $15 co-pay for the medication.
- Two months later, you see the specialist again for a follow-up. The bill is 50 co-pay**.
With a co-pay system, your out-of-pocket costs are directly tied to how frequently you use medical services.
Co-Insurance vs. Co-Pay: A Common Point of Confusion
It's easy to mix up co-pay and co-insurance, but they are different.
- Co-Pay (illustrative): A fixed amount (£20, £50, etc.) you pay per service.
- Co-Insurance: A percentage of the total cost of the service (e.g., 20%) that you pay.
For example, if a hospital stay costs £10,000 and you have a 10% co-insurance clause, you would pay £1,000. Co-insurance is less common in standard UK PMI but can be found in some international policies, often in combination with a deductible (excess).
Head-to-Head Comparison: UK Excess vs. International Co-Pay
To make the differences crystal clear, let's compare the two models side-by-side across several key factors.
| Feature | UK Excess Model | International Co-Pay Model |
|---|---|---|
| When You Pay | On your first claim(s) of the policy year, until the excess amount is met. | Every time you use a specific, covered medical service. |
| How Much You Pay | A pre-agreed fixed sum (e.g., £250, £500) for the entire policy year. | A smaller, pre-agreed fixed fee per service (e.g., £25 per consultation). |
| Predictability | High. You know your maximum out-of-pocket cost for the year is your excess amount. | Lower. Your total annual cost depends entirely on how often you need care. |
| Impact on Usage | Encourages you to consider whether a small claim is worth "using up" your excess. | Discourages overuse of services, as each visit has a direct cost. |
| Best For... | Someone who wants certainty about their maximum annual cost and may have multiple treatments for one condition. | Someone who uses healthcare services infrequently but wants a low barrier to a single visit. |
| Administrative Simplicity | Simple. You and the insurer track one annual figure. | More complex. Requires tracking and payment for every single interaction. |
| Typical Market | United Kingdom | USA, UAE, parts of Europe and Asia. |
The Rise of Hybrid Models: Co-Pay Options in the UK
While excess is the UK standard, the market is evolving. Some of the best PMI providers are now introducing co-pay options, often called "cost-share" or "shared responsibility" arrangements.
These are typically offered as an option for specific types of treatment, most commonly therapies. This includes:
- Physiotherapy
- Osteopathy
- Chiropractic treatment
- Psychological therapy
For example, a policy might have a £500 main excess for surgeries and specialist consultations, but also a 25% co-pay for any physiotherapy claims. This means if you have 10 physiotherapy sessions costing £80 each (£800 total), you would pay 25% of that cost, which is £200.
This hybrid approach allows insurers to offer more competitive premiums while still providing comprehensive cover for major medical events. It gives consumers more choice in how they structure their policy and share costs.
International PMI (IPMI) for UK Expats and Globetrotters
If you're a UK citizen planning to live, work, or travel abroad for an extended period, a standard UK PMI policy won't be suitable. You'll need International Private Medical Insurance (IPMI).
This is where understanding co-pays becomes essential. IPMI policies are designed to work with healthcare systems all over the world, many of which are built around co-payments.
An IPMI policy might feature:
- An annual excess (deductible).
- Co-pay options for outpatient care (GP and specialist visits).
- Co-insurance for major inpatient treatment (hospital stays).
Navigating these complex international policies can be challenging. An expert broker like WeCovr is invaluable here. We specialise in both UK PMI and IPMI, and can help you find a policy that provides seamless, comprehensive cover whether you're in London, Dubai, or Singapore.
How to Choose the Right Contribution Level for You
Deciding between a high excess, a low excess, or a policy with co-pay elements depends on three key factors: your finances, your health, and your mindset.
1. Assess Your Financial Situation
- High Excess (£1,000+) (illustrative): This is a good choice if you have readily available savings to cover the excess and your main goal is to significantly lower your monthly premium. You see insurance as a safety net for large, unexpected costs.
- Medium Excess (£250-£500) (illustrative): If you can comfortably afford to pay this amount without it causing financial stress, it offers a great balance of premium savings and accessible care.
- Low/Zero Excess (£0-£100) (illustrative): If you prefer to budget with a fixed monthly cost and want to avoid any surprise bills when you claim, a low excess is the best option, though your premium will be higher.
2. Consider Your Health and Likelihood of Claiming
Be honest with yourself. While you can't predict the future, you can consider your general health and lifestyle.
- If you are young, fit, and healthy with no family history of serious illness, you might feel comfortable opting for a higher excess.
- If you have a young family or participate in sports where injuries are more likely, a lower excess might provide better peace of mind.
3. A Wellness Bonus: Proactive Health Can Lower Your Long-Term Costs
Regardless of your policy structure, the best way to manage healthcare costs is to stay healthy. Many modern PMI policies actively encourage this.
- Nutrition: A balanced diet rich in whole foods, fruits, and vegetables is fundamental to good health. Using an app to track your intake can be a powerful tool. WeCovr is pleased to offer complimentary access to our AI-powered calorie and nutrition tracker, CalorieHero, to all our life and health insurance clients.
- Sleep: Aim for 7-9 hours of quality sleep per night. It's essential for immune function, mental health, and physical recovery.
- Activity: The NHS recommends at least 150 minutes of moderate-intensity activity a week. This could be brisk walking, cycling, or swimming. Regular exercise reduces your risk of many conditions that could lead to a PMI claim.
By investing in your wellness, you not only feel better but also reduce your likelihood of needing to claim, making a higher-excess policy a more financially sound choice over the long term.
WeCovr's Expert Approach to Finding Your Perfect PMI Policy
Choosing the right private medical insurance can feel overwhelming, but you don't have to do it alone. As an independent, FCA-authorised broker, WeCovr works for you, not the insurance companies.
Our service is provided at no cost to you. We take the time to understand your unique needs, budget, and health circumstances. We then compare policies from the UK's leading private health cover providers to find the perfect match.
Our clients consistently give us high satisfaction ratings because we provide clear, unbiased advice. We can:
- Explain the pros and cons of different excess and co-pay options.
- Generate quotes instantly to show you how changing your excess affects your premium.
- Help you understand the finer details of policy documents, ensuring there are no surprises.
- Offer discounts on other types of cover, such as life insurance or income protection, when you buy a policy through us.
We are committed to making private healthcare accessible and understandable for everyone.
Does a higher excess always guarantee a cheaper PMI policy?
Can I change my excess level during my policy year?
What happens if my treatment costs less than my excess?
Is co-pay becoming more common in the UK?
Ready to find the right private medical insurance policy for you? Get a free, no-obligation quote from WeCovr today and let our experts guide you through the options.
Sources
- NHS England: Waiting times and referral-to-treatment statistics.
- Office for National Statistics (ONS): Health, mortality, and workforce data.
- NICE: Clinical guidance and technology appraisals.
- Care Quality Commission (CQC): Provider quality and inspection reports.
- UK Health Security Agency (UKHSA): Public health surveillance reports.
- Association of British Insurers (ABI): Health and protection market publications.
