Understanding Health Insurance Excess: Per-Claim vs Per-Year
Health insurance excess is the amount you pay towards a private medical insurance (PMI) claim before your insurer covers the rest. For UK employees, this excess can be set per claim or per policy year. The difference matters, especially if you need multiple treatments or face complications after an initial procedure.
Most large UK group PMI policies (from providers like Bupa, AXA Health, Aviva, Vitality, WPA) apply the excess once per policy year, not per claim. However, some schemes—especially older or cost-conscious ones—still use a per-claim excess. Always check your scheme’s documentation or ask HR to clarify.
How Excess Types Affect Your Costs
Excess Type | How It Works | Example |
|---|---|---|
Per-Claim | You pay the excess each time you make a new claim. | If your excess is £200 and you claim for a knee operation, then later claim for a related infection, you may pay £200 each time. |
Per Policy Year | You pay the excess only once per policy year, no matter how many claims you make. | If your excess is £200, you pay it on your first claim. Further claims that year are fully covered (subject to policy terms). |
Be aware: Some policies count follow-up or remedial treatment as a new claim, especially if there’s a gap between treatments or a new complication arises. This can lead to unexpected extra excess payments.
A Messy, Realistic Example
Imagine you have a group PMI policy with a £250 per-claim excess. You undergo surgery for a hernia in March and pay the £250 excess. Two months later, you develop an infection related to the surgery and need further treatment. The insurer treats this as a separate claim, so you’re asked for another £250. You question this, but the insurer points to the policy wording: any new episode or complication after a certain period counts as a fresh claim. You now face £500 in excess payments for what feels like one medical issue.
This scenario is surprisingly common. Always check if remedial or follow-up care is covered under the original claim, or if a new excess applies. Ask your HR or broker for clarification in writing.
Common Disputes: Exclusions, Chronic vs Acute, and Excess Calculations
Pre-existing Conditions: Most group PMI uses moratorium or full medical underwriting. Conditions you’ve had in the last five years may be excluded. Always get underwriting details in writing.
Chronic vs Acute: PMI generally covers acute (curable) conditions, not chronic (ongoing) ones. Disputes often arise if, for example, a flare-up of a chronic illness is claimed as acute.
Excess Application: Disputes frequently occur when employees are charged the excess more than once. Clarify with your HR team or insurer whether your policy is per-claim or per-year, and how follow-up care is treated.
Practical Steps if You Have a Dispute
Request a written explanation from the insurer or broker, including the exact policy wording used.
Ask whether your treatment is considered a new claim or a continuation of the previous one.
Check if your condition is classified as chronic or acute, and on what basis.
Keep all correspondence, medical notes, bills, and evidence of excess payments.
If unresolved, escalate to the Financial Ombudsman Service, which handles PMI complaints, including those about exclusions and excesses.
Template: Requesting Clarity on Excess
Dear [Insurer/Broker/HR],
Please provide a full explanation of the excess applied to my recent claim, including:
- The relevant policy wording
- Underwriting type (moratorium/full medical)
- Whether my condition is classified as chronic or acute
I would appreciate this in writing, as per your obligations under FCA complaint rules.
Regards,
[Your Name]
Tax, Payroll, and Reporting: What Employees Should Know
Employer-provided medical insurance is usually a benefit in kind (BIK), so you’ll pay tax on the premium your employer pays, unless an exemption applies. The excess you pay towards claims does not reduce the taxable value of the benefit.
P11D Reporting: For the 2025/26 tax year, employers generally report the full PMI premium (minus any direct employee contributions) on your P11D.
Payrolling BIK: From April 2027, mandatory payrolling of certain benefits, including medical insurance, will be phased in. This means tax is deducted via payroll as you receive the benefit. Check with HR for your scheme’s timeline.
Employee Contributions: If you pay part of the premium directly (not via salary sacrifice), this can reduce your taxable benefit. Excess payments at claim time do not.
Scenario | Taxable Benefit | Reporting Impact |
|---|---|---|
Employer pays full premium, employee pays excess | Full premium is taxable | Reported on P11D or via payroll |
Employee pays part of premium (from net pay) | Premium minus employee contribution | Reduced BIK on P11D/payroll |
Excess paid by employee at claim | No reduction in BIK | No change to P11D/payroll |
Checklist: Reducing Health Insurance Surprises
Ask HR how PMI is reported—P11D or payroll—and when any changes will apply.
Check if you pay any premiums directly and ensure this is reflected in your BIK calculation.
Keep records of all excess payments and policy documents for reference in case of disputes.
Request a summary of your policy’s excess and exclusions each renewal.
Questions to Ask HR, Insurer, Broker, or Doctor
Is my excess applied per claim or per policy year?
How are follow-up or remedial treatments classified—new claim or continuation?
What is the policy’s approach to chronic vs acute conditions?
Are there any exclusions I should be aware of for my health history?
How will tax be handled on my benefit—P11D or payroll, and when will this change?
Keeping Evidence: Why It Matters
Always keep:
Policy documents and renewal summaries
Letters and emails from your insurer, broker, or HR
Screenshots of online claim decisions
Medical notes and bills related to your claim
Records of excess payments
Having clear evidence helps if you need to challenge a decision or escalate a complaint.
How Caira by Unwildered Can Help
Caira by Unwildered is designed to help UK employees and HR teams make sense of health insurance excess, disputes, and policy wording. You can upload policy documents, letters, screenshots, emails, medical notes and bills. Caira can compare wording, organise your evidence, draft questions or emails, and help you understand your next steps—any time, day or night. No question is too basic.
Useful Starting Points
This article is general information, not legal, tax, insurance, financial or medical advice.
