Residual Risk arises when medical and hospital expenses are actually incurred but a health fund declines to pay part or all of a claim.

With the low level capped health fund policies residual risk is the excess over A$30,000.

Residual risk also arises when claims are rejected for expenses incurred through fraud, or for unauthorized or excluded treatments.

All health funds have systems of checks and balances to prevent policyholders from incurring unauthorised expenses or making fraudulent claims, but in the best regulated funds a few claims get through the risk management system. Funds are continually on alert to detect fraudulent claims by policyholders, who are sometimes aided and abetted by the dubious practices of a minority of private clinics.

A 457 visa employee can choose to pay for unauthorised or excluded treatment, but where medical and hospital expenses remain unpaid the Sponsor may be held responsible.

Residual risk as a result of fraud on the part of a 457 visa employee can be covered under a Sponsor’s corporate general insurance policy.