Excess, deductible, co-insurance and out-of-pocket maximums
Cost sharing is the part of a plan you control, and the part most people set without understanding. IPMIBenefits explains excess, deductible, co-insurance and out-of-pocket maximums, how they apply per claim or per year, and how to pick a level.
- Excess and deductible mean the same thing; British wording tends to say excess and American wording deductible.
- A per-claim excess is paid on each separate claim or condition, so the same amount costs far more than an annual excess.
- Cigna Global offers a cost share of 0%, 10%, 20% or 30%; Now Health WorldCare offers 10% or 20% on outpatient care.
- An excess is paid once but co-insurance applies to every bill, which is why an out-of-pocket maximum matters on long treatment.
- Where a hospital bills the insurer directly, it usually collects your excess and co-insurance from you at discharge.
- What cost sharing is and why it exists
- Excess and deductible: the fixed first slice
- Co-insurance and co-payments: the percentage share
- The out-of-pocket maximum: the cap on your share
- How the pieces combine on a real claim
- Cost sharing, benefit by benefit
- How to choose your level of cost sharing
- Common cost-sharing mistakes
- FAQ
What cost sharing is and why it exists
Cost sharing is the part of a claim you pay yourself under the terms of the plan. Every international private medical insurance (IPMI) plan offers some form of it, and most let you choose how much. The more you agree to share, the lower the premium, because the insurer expects to pay less on every claim and to see fewer small claims at all.
There are three instruments, and they are used together.
- Excess or deductible
- A fixed amount you pay before the plan pays anything. The two words mean the same thing; British wording tends to say excess and American wording deductible.
- Co-insurance or cost share
- A percentage of each bill you pay after the excess. Also called co-payment where it is a fixed amount per visit rather than a percentage.
- Out-of-pocket maximum
- A cap on the total you pay through co-insurance in a year. Once reached, the plan pays the rest in full.
Cost sharing is different from a limit. A limit caps what the insurer pays; cost sharing sets what you pay first. The limits guide covers the first; this guide covers the second. On a real claim, cost sharing is applied before the plan's share is calculated against the limit.
Excess and deductible: the fixed first slice
The excess is the simplest instrument. You choose an amount when you buy; on a claim, you pay up to that amount and the plan pays the rest, subject to everything else in the table. Choosing a higher excess lowers the premium, and the saving grows with the amount, with diminishing returns at the top end, as the cost guide describes.
Insurers publish ranges of options. HCI Nimbl publishes a set of core deductible choices from nil upwards. Now Health WorldCare offers an annual deductible on in-patient and day-patient treatment across a wide range of options. Cigna Global offers a deductible with options that depend on the plan currency. AXA Global Healthcare offers a per-person excess in exchange for a lower premium. VUMI Global publishes plan-specific deductibles that can vary by treatment location.
The questions to ask about an excess:
- Per claim or per year? A per-year excess is paid once, however many claims you make. A per-claim excess is paid on each separate claim or condition. The same amount is far more expensive to you on a per-claim basis if you have several conditions in a year.
- Per person or per family? Family plans sometimes cap the total excess across members.
- Which benefits does it apply to? Many plans take the excess from inpatient claims only and use a different instrument for outpatient. Some apply it to everything; some exempt maternity, wellness or evacuation.
- Does it reset at renewal? Annual excesses do. A claim that runs across a renewal may trigger the excess twice.
Co-insurance and co-payments: the percentage share
Co-insurance is a percentage of each bill you pay after the excess. If you choose a share, the plan pays the rest of each eligible claim. It is used most on outpatient benefits, because outpatient claims are small and frequent and a percentage keeps you mindful of each one, and sometimes on major dental and therapies.
Insurers publish co-insurance in two ways. Some apply it across the plan: Cigna Global offers a cost share of 0%, 10%, 20% or 30% after the deductible, with a higher share meaning a lower premium. Some apply it to outpatient only: Now Health WorldCare offers out-patient co-insurance of 10% or 20% on its levels that include outpatient care. Optimum Global defines deductible, coinsurance and copayment on its schedule or benefit table.
A co-payment is the fixed-amount cousin: a set sum per consultation rather than a percentage. Now Health WorldCare offers an out-patient per-visit excess of a stated amount on Advance and above, which is a co-payment under another name. HCI Nimbl offers separate deductible choices on its outpatient module.
The arithmetic matters most on long treatment. An excess is paid once; co-insurance is paid on every bill. On a course of chemotherapy or a year of regular physiotherapy, a percentage share accumulates in a way a fixed excess does not. That is what the out-of-pocket maximum is for.
The out-of-pocket maximum: the cap on your share
An out-of-pocket maximum caps what co-insurance can cost you in a policy year. Once your share of eligible claims reaches the cap, the plan pays subsequent claims in full for the rest of the year. Cigna Global describes its version as a cap on what your cost share can add up to, so that your downside is limited.
It is the instrument that makes a high co-insurance percentage safe. Without a cap, a serious illness with a percentage share could cost you a large sum; with a cap, you know the most you can pay. When comparing plans with co-insurance, the out-of-pocket maximum is the figure to find, and its absence is worth noticing.
Three details to check:
- Does it include the excess? Some caps count the excess towards the maximum; others sit on top of it.
- Is it per person or per family?
- Which benefits count? Co-insurance on outpatient may count; a fixed co-payment per visit may not.
See what your excess would save
Nomi quotes 20+ insurers live with every excess and co-insurance option, so you can watch the price move.
How the pieces combine on a real claim
Trace a claim through the three instruments in the usual order. First the waiting period and the benefit limit decide whether and how much is eligible. Then the excess is taken: you pay up to the excess amount, if it applies to that benefit and has not already been met this year. Then co-insurance is applied to the remainder: you pay your percentage, the plan pays the rest. Finally, if your cumulative share has reached the out-of-pocket maximum, the plan pays everything else in the year.
Two combinations deserve a closer look.
- High excess, no co-insurance. You pay the first slice of a big event and nothing after it. Suits people with savings who want protection against catastrophe and are happy to pay for routine care themselves. The premium saving is large.
- Low excess, modest co-insurance, out-of-pocket cap. You pay a small share of everything, with a known ceiling. Suits people with regular care who want the plan to pay from the first visit. Cigna Global notes that combining a sensible deductible and cost share with an out-of-pocket cap is often how members reach a higher plan level for close to a lower level's price.
Cost sharing also interacts with direct billing. Where a hospital bills the insurer directly under a guarantee of payment, the hospital will usually collect your excess and co-insurance from you at discharge. Where you pay and claim, the insurer deducts your share from the reimbursement. Either way, keep the amount available.
Cost sharing, benefit by benefit
| Benefit | What to check about cost sharing |
|---|---|
| Outpatient | Whether a per-visit excess, co-insurance or both apply, and whether the main excess is taken from outpatient claims. |
| Inpatient | Whether the excess is per year or per claim, and whether it is collected by the hospital at discharge. |
| Cancer care | Whether co-insurance applies to a long course of treatment, and whether an out-of-pocket maximum caps it. |
| Dental | The reimbursement rate for major work, which is a form of co-insurance, and whether the excess applies. |
| Maternity | Whether the excess or co-insurance applies to the delivery, or the benefit is paid without them. |
| Evacuation | Usually paid without cost sharing; confirm. |
| Chronic conditions | How co-insurance on frequent prescriptions and reviews adds up over a year. |
| Wellness | Often exempt from the excess; confirm, because a check-up smaller than the excess would otherwise pay nothing. |
How to choose your level of cost sharing
- Start with the excess. Pick the largest amount you could pay in a bad year without worry. Savings or a family budget decide this, not the premium table.
- Check the basis. Per year is safer than per claim at the same amount. Per family is safer than per person for a family plan.
- Add co-insurance only with a cap. If you take a percentage share, make sure an out-of-pocket maximum limits it, and know the figure.
- Match it to how you use care. Regular outpatient care argues for a low excess and perhaps a small co-payment; rare use argues for a high excess and no co-insurance.
- Use the saving to buy cover, not to pocket it. A sensible excess often funds a higher tier or a higher annual maximum, which protects you more than the cash would.
- Revisit at renewal. Your savings, your health and the market all change.
Across the insurers IPMIBenefits compares, the cost-sharing options differ enough that the same plan level can be set up as catastrophe-only cover or as pay-from-the-first-visit cover. Nomi shows the excess and co-insurance options on each plan it quotes and the price of each, so you can see what your share buys. The inpatient versus outpatient guide explains the level of cover the cost sharing sits on.
Common cost-sharing mistakes
- Choosing a high excess to cut the premium without having the amount available when a claim comes.
- Not noticing the excess is per claim rather than per year.
- Taking a high co-insurance percentage on a plan with no out-of-pocket maximum.
- Assuming the excess does not apply to outpatient, maternity or wellness claims without checking.
- Comparing premiums between plans with different excesses as if they were the same product.
- Forgetting that a claim spanning a renewal can trigger the annual excess twice.
Cost sharing is the one part of a plan you set yourself. Set it deliberately, on the basis of what you could pay rather than what you would save, and it is the cheapest way to keep strong cover affordable.
Frequently asked questions
What is the difference between an excess and a deductible?
What is co-insurance?
What is an out-of-pocket maximum?
Is a per-claim excess worse than an annual one?
Does the excess apply to outpatient claims?
How does IPMIBenefits help me set cost sharing?
Set your cost sharing across the whole market
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This page is general information, not personal or medical advice. Prices are indicative and confirmed by the insurer at underwriting. For advice on your situation, speak to an experienced broker.