What Is A Co-Payment In Health Insurance?

Find out all about co-payments and what they mean for your health cover here with Savvy. 

Written by 
Savvy Editorial Team
Savvy's content writing team are professionals with a wide and diverse range of industry experience and topic knowledge. We write across a broad spectrum of finance-related topics to provide our readers with informative resources to help them learn more about a certain area or enable them to decide on which product is best for their needs with careful comparison. Meet the team behind the operation here. Visit our authors page to meet Savvy's expert writing team, committed to delivering informative and engaging content to help you make informed financial decisions.
Our authors
, updated on July 10th, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Health Insurance Banner - A man lying in a hospital bed being treated by a doctor

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.

Frequently asked questions about health insurance co-payments

What are co-payments in regards to the Pharmaceutical Benefits Scheme (PBS)?

In regards to the PBS, a co-payment refers to the amount an individual has to pay towards the cost of their PBS-subsidised medicine. The co-payment amount is set under Australian healthcare legislation. As of January 1, 2023, the PBS co-payment amount was reduced from $42.50 to $30.00 per pharmaceutical benefit, or $7.30 if the patient holds a concession card. This is the maximum amount you will have to pay per item on your prescription. However, pharmacists do have the ability to apply a discount to the PBS co-payment amount. 

If I need to be admitted to hospital but can’t afford the co-payment, can I still get treatment as a private patient?

Many health funds have hardship policies which could possibly assist if you do need to be admitted to hospital but can’t afford the co-payment. You should contact your health fund and ask about hardship provisions if you are in this situation.  

Will I have to pay a hospital co-payment if I’m admitted for day surgery but don’t stay overnight?

This will depend on the specific rules of your health fund. However, in general terms, hospital admission co-payments only apply to hospital admissions which require an overnight stay. Day surgery procedures are often exempt from hospital admission co-payments. 

Are there any co-payments required to make a claim on an extras policy?

No – co-payments only apply to claims made against a hospital cover policy for the costs of admission to hospital as a private patient. There are no co-payments specifically which apply to extras policies.

Helpful health insurance guides

Health Insurance Banner - Man with glasses looking at his laptop and choosing a health insurance policy

Choosing Health Insurance

Learn some important tips for choosing your health insurance policy right here with Savvy. With more than 35 health insurance...

Health Insurance Banner - Couple sitting on the couch together looking at a laptop

Switching Health Insurance

Find out more about the process of switching your health insurance policy and how to compare them with Savvy. Health...

Health Insurance Banner - Young woman looking at health insurance documents at a desk

Health Insurance Loading

Nearly 30? Find out what the Lifetime Health Cover loading is and how it may affect you here with Savvy....

Health Insurance Banner - Woman sitting in a doctor's office looking at a report with her doctor

Health Insurance Gap 

Find out what a gap is in health insurance and how to avoid one on your policy here with Savvy....

Compare health insurance policies online

We can help you compare health insurance policies side-by-side, with affordable hospital, extras and ambulance coverage offers from trusted insurers. Get started with a free quote today!

Disclaimer:

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of health insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a health insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

Savvy’s comparison service is provided by Compare Club. Compare Club compares selected products from a panel of trusted insurers and does not compare all products in the market.

Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.