Out-of-pocket spending on healthcare in the UK reached £49 billion in 2025, accounting for 14.1% of all health expenditure, according to the UK Health Accounts. For anyone with private health insurance, a chunk of that out-of-pocket total comes from co-payments and excesses — the amounts you pay before your insurer steps in. On a £5,000 claim, a 20% co-payment alone can leave you £1,000 out of pocket on top of any excess.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Private health insurance covers about 2.8% of the UK’s total healthcare bill, or £9.5 billion, yet the way policies share costs between you and the insurer is often misunderstood. The two main levers — excess and co-payment — work differently, and picking the wrong combination can cost hundreds more than you expected. Here’s what you actually need to know.
What I tend to notice is that most people focus on the monthly premium and barely glance at how the cost-sharing works. That’s understandable — the premium is what leaves your account every month. But the structure matters more than most realise. NHS waiting lists are pushing more people toward private cover, and once you’re in the system, the way your policy shares costs determines how much you actually pay when you use it.
Excess levels, co-payment percentages, and what they cost you in practice
The numbers that matter most are the excess level, the co-payment percentage, and whether the excess applies per claim or per policy year. Each one changes your out-of-pocket total in a different way.
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| Excess Level | Typical Premium Reduction | Out-of-Pocket on a £5,000 Claim |
|---|---|---|
| £0 | None (highest premium) | £0 (insurer pays all) |
| £100 | 5–10% | £100 |
| £250 | 10–15% | £250 |
| £500 | Up to 30% | £500 |
| £1,000 | Up to 30%+ | £1,000 |
The premium savings from a higher excess are real. A £500 excess can cut your annual premium by up to 30%, according to Insurance Curator. On a £1,500 annual premium, that’s £450 saved — enough to cover the excess itself if you claim once. But if you claim twice in a year on a per-claim excess, you pay £500 each time.
Co-payments add a second layer. A 20% co-payment on a £4,750 remaining cost (after a £250 excess) means you pay £950 on top of the £250. That’s £1,200 total on a £5,000 claim. Wecovr’s guide to excess and co-payments notes that co-payments are more common on outpatient care, therapy and diagnostics than on inpatient surgery. So if you mainly use insurance for specialist consultations and scans, a co-payment hits you more often than an excess would.
Medical inflation in the UK runs at 5–10% per year, well above general inflation, according to Insurance Curator. That means premiums rise annually regardless of your claims history. Choosing a higher excess or a co-payment is one of the few ways to push back against those increases without dropping cover altogether.
Errors and gaps that cost money
Picking nil excess without checking the premium difference
A £0 excess sounds safest — you pay nothing when you claim. But the premium for nil excess is the highest available. On a typical policy, the difference between £0 and £500 excess can be £350–£450 per year. If you don’t claim for three years, you’ve spent over £1,000 extra on premiums for protection you didn’t use. The Wecovr excess guide gives a concrete example: £0 excess at £1,500/year versus £500 excess at £1,150/year — a £350 annual saving. Over five claim-free years, that’s £1,750 in your pocket.
Confusing per-claim and per-policy-year excess
Per-claim excess means you pay the excess for each new condition or recurrence. Per-policy-year excess means you pay it once annually regardless of how many claims you make. If you expect multiple claims in a year — say, a knee issue followed by a separate digestive problem — per-policy-year excess is significantly cheaper. The difference isn’t always obvious in the policy summary. You have to check the wording. Wecovr’s comparison of excess types notes that per-claim excess is more common, so if you want per-policy-year, you may need to ask specifically.
Ignoring how co-payments stack across multiple claims
A 20% co-payment on a single £2,000 claim costs you £400. But if you have three separate outpatient episodes in a year — consultation (£300), MRI (£600), follow-up (£200) — the co-payment applies to each. Total cost: £1,100, of which you pay 20% (£220). Add a £250 excess and you’re at £470 for the year. Without a cap on co-payments, that number can keep climbing. Some policies include an annual cap, but Wecovr’s premium guide points out that capped co-payments are not universal. You need to confirm whether your policy has one.
Overestimating how often you’ll actually claim
Most people with private health insurance don’t claim every year. If you’re generally healthy and have an emergency fund, a higher excess or co-payment makes financial sense. The premium savings accumulate in the years you don’t claim, and you have the cash to cover the excess if you do. The mistake is paying for low cost-sharing year after year when you rarely use the policy. MyInsuranceExpert’s cost guide notes that age is the single biggest premium driver, so younger policyholders in particular benefit from taking on more excess early on.
How to choose the right cost-sharing structure for your situation
Start with your emergency fund, not the premium
The first question isn’t “how much do I want to save each month?” It’s “how much can I afford to pay out of pocket if I need treatment tomorrow?” If you have less than £1,000 in accessible savings, a £500 excess is risky — one claim wipes out a big chunk of your buffer. A £100 or £250 excess keeps your exposure manageable while still reducing the premium. If you have several months of expenses saved, a £500 or £1,000 excess becomes a sensible trade-off. The Wecovr guide recommends higher excess for generally healthy individuals with emergency funds who prioritise lower monthly premiums.
Decide between excess and co-payment based on claim type
Excess works best when you want a predictable maximum cost per claim. You know you’ll pay £250 or £500, and that’s it. Co-payment works differently — your cost scales with the treatment. For predictable, lower-cost care like outpatient consultations and diagnostics, a modest excess is usually cheaper overall. For high-cost treatments like surgery or cancer care, a co-payment can leave you with a much larger bill. Wecovr’s practical applications show that a £500 excess on a £1,050 outpatient episode (consultation, MRI, follow-up) costs you £500, while a 20% co-payment on the same episode costs £210 — but on a £10,000 surgery, the co-payment costs £2,000 versus a fixed £500 excess.
Per-claim versus per-policy-year: which fits your health pattern?
If you have a single ongoing condition that needs periodic treatment, per-claim excess means you pay once for that condition and subsequent related claims are covered. If you tend to have unrelated issues in the same year — say, a sports injury and a separate respiratory problem — per-policy-year excess is cheaper because you pay the excess only once. The trade-off is that per-policy-year excess policies often have slightly higher premiums to offset the insurer’s risk. Wecovr’s premium analysis suggests per-policy-year excess is more economical for those expecting multiple claims within a year.
What’s changing: medical inflation and the future of cost-sharing
Medical inflation in the UK is running at 5–10% annually, and Insurance Curator reports that claims frequency and severity are both rising. More people are using private care for mental health and physiotherapy, and expensive new treatments — some cancer drugs cost £10,000 per dose — are pushing up the average claim value. Insurers are likely to respond by making co-payments more common and by raising standard excess levels. If you’re choosing a policy now, locking in a structure you’re comfortable with for the next few years matters more than it used to. Policies that offer capped co-payments or per-policy-year excess may become harder to find at competitive prices.
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| Cost-Sharing Type | How It Works | Best Suited To |
|---|---|---|
| Excess (per claim) | Fixed amount paid for each new condition | Single-condition users, predictable costs |
| Excess (per policy year) | Fixed amount paid once annually | Those expecting multiple unrelated claims |
| Co-payment (uncapped) | Percentage of each claim, no upper limit | Low-risk, high-savings individuals |
| Co-payment (capped) | Percentage with annual maximum | Those wanting premium savings with a safety limit |
Frequently asked questions about co-payments and excess in UK health insurance
Can I have both an excess and a co-payment on the same policy? ▾
Does the excess apply to each family member or to the whole policy? ▾
What happens if I miss a co-payment cap deadline? ▾
Is a co-payment applied to NHS treatment if I go private? ▾
Can I change my excess level mid-policy? ▾
Does a higher excess affect my no-claims discount? ▾
The cost-sharing decision you make now shapes your costs for years
Medical inflation isn’t slowing down, and premiums will keep rising. The excess and co-payment you choose today determines how much of that increase you absorb versus how much you pass to the insurer. A higher excess locks in lower premiums for as long as you keep that level, while a co-payment shares the risk of rising treatment costs. Neither is right for everyone, but understanding the mechanics — per-claim versus per-year, capped versus uncapped, fixed versus percentage — is what separates a policy that works from one that surprises you. If you’re reviewing your cover, the essential steps to renew your UK personal insurance include checking these exact details before you sign.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Is private health insurance worth it for children in the UK? A parent’s dilemma.
Sources and Further Reading
Hospital cash benefit UK insurance tips — A look at how fixed cash payments for hospital stays compare with cost-sharing structures like excess and co-payment.
How your smoker status affects insurance premiums in the UK — Smoking can add 30–50% to health insurance premiums, making cost-sharing choices even more consequential.
Wecovr (n.d.). UK health insurance excess and co-pay guide. 🔗
Wecovr (n.d.). UK health insurance excess, co-payments and premiums. 🔗
Wecovr (n.d.). UK private health insurance excess and co-payments. 🔗
Office for National Statistics (2025). UK Health Accounts: 2024 and 2025. 🔗
Insurance Curator (n.d.). Why UK health insurance prices increase each year and what you can do about it. 🔗
MyInsuranceExpert (n.d.). Private health insurance cost UK 2026. 🔗
