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. 

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, updated on July 10th, 2023       

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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.

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