Help! I need health insurance – 6 Steps to getting health insurance today
Health insurance is a very important part of our lives. It can be quite confusing to go through all the details though. By reading this guide, you will be able to find out about all the different options available, which will help you and your family have the best* health cover for you.
This guide takes you through all the important aspects of comparing and choosing a private health insurer.
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- Why obtain private health insurance?
- Private health insurance is supported by the Australian Government
By taking out private health cover, you are protecting you and your family from having to pay out of pocket for medical treatments. The various benefits you can enjoy by obtaining private health insurance include:
- The ability to choose the hospital where you're treated
- The ability to choose between being treated in a public hospital or a private hospital
- The ability to choose the doctor who will treat you
- Shorter wait times at hospitals and doctors'
- Cover for a range of different fees including doctors' fees, theatre costs and accommodation costs
- A range of additional services such as chiropractic, dental care, optical care, remedial massage, appliances such as hearing aids, acupuncture and more
As you can see, if you have private health you can enjoy better service in terms of shorter waiting periods and greater choice of hospitals and doctors. Private health insurance covers a range of additional services as well, including preventive therapies and alternative medicine such as acupuncture and massage.
Private health insurance is supported by the Australian Government
- If you take out private health insurance you can enjoy a 30% rebate.
- If your an older Australians you can enjoy a higher rebate, Australians aged 65-69 receive 35% rebate and Australians aged 70 and over enjoy a 40% rebate.
There are a number of different ways to claim your rebate:
- You can deduct it from your premium
- You can claim the rebate on your tax return
- You can get the rebate paid in cash from the local Medicare office.
The types of private health insurance
With most cover, you can choose between two different options: hospital and extras. You can choose to have either one or both.
- What does hospital cover? The hospital cover pays an accommodation benefit, some treatment costs in certain hospitals and some of the doctors' fees. Extras such as television sets and phone calls may not be included in your cover.
- What is extras cover? Ancillary (or extras) health insurance will cover any treatment costs that aren't covered by Medicare, such as physiotherapy, acupuncture and dental care. Products such as glasses and contact lenses are also usually covered by this.
Of course, the benefits which are offered vary from fund to fund. It is also worth noting that the payout will most probably not cover the entire cost of your treatment.
Doesn't Medicare cover me?
In Australia, Medicare makes sure that every Australian has access to health care. This includes eye tests, various types of examinations and tests, subsidised or free treatment by practitioners and free treatment to public patients in a public hospital.
However, it is worth pointing out that Medicare doesn't cover everything, which is why private health care is an important part of the Australian health care system.
About a third of all health care in Australian is funded by the private health system and one of the major benefits of private treatment is the choice of receiving treatment in both public and private hospitals. One of the other major shortfalls of Medicare is that it does not cover various ancillary services, such as chiro and physio.
- What is the Medicare Levy Surcharge? Medicare Levy Surcharge is charged to any individual earning more than $90,000 a year or a family earning over a combined $180,000. If they do not have private health insurance (and hospital cover) then they will have to pay this surcharge, on top of a 1.5% Medicare Levy that almost everyone already pays with their taxes.
- How can I avoid paying the Medicare Levy Surcharge? Take out hospital cover with an excess of $500 or less, or, if you're taking out cover as a couple or family, $1000 or less.
Being treated in a private hospital
Whilst private hospitals may have luxuries and advantages that a regular public hospital might not have – such as a room just for yourself, television sets and your own private bathroom – there is no real evidence out there that shows you will get better health care in the private system. You will, however, most probably find your stay in the hospital more enjoyable and you have a much better choice and flexibility when it comes to choosing when you want to be admitted into hospital.
All Australians are entitled to free treatment under Medicare in a public hospital, even if they do not have any insurance of their own. One of the common problems that people have with private health insurance is the bill that can add up if they are in hospital for an extended period of time. If you cannot afford to pay your bill after being in hospital for a long time, you may need to be moved from private care to a public hospital during your treatment, which could cause some extra stress to you and your family.
Deciding your cover needs is simple. Are you a me, we or us? That is, are you after single, couple or family cover?
Are you single?
Taking out cover as a single is the cheapest and easiest type of cover. Having cover when you're young and single can really pay off. The earlier you take out cover, the less you'll pay in the long run.
Looking for cover built for two?
If you're a twosome, you might be able to save on cover by getting a combined policy. Not only can you save money, it is also a timesaver.
Have you got dependants to think about?
Getting cover for the whole family is a quick and easy solution. Have everyone in one family on one policy.
It is important to find the best* policy out there for you as there are so many different policies available.
When it comes to hospital cover, you can choose the level of cover that you would like to pay for. In general, there are 3 basic levels of cover available.
The top level basically means you're covered for treatment in both a public and private hospital as a private patient. By being fully covered and a private patient, you are able to eliminate public hospital waiting lists.
By signing up for the middle level of cover, you are basically not covering yourself for all the treatments available in a private hospital. However, you will generally be able to get treatment in a public hospital with the doctor of your choice.
These policies have many different restrictions and exclusions. They generally also have a fairly high excess too. However, you should be able to avoid the Medicare Levy Surcharge if you find the right deal.
Extras cover generally also has three levels of cover to choose from.
With a top level policy, you'll be covered for all kinds of extra services and treatments such as dental and optical.
The next level down is middle level cover option, which will still give you some dental care and other services, but not as much as with the top level cover policy.
Generally, dental care is still available but orthodontic treatment is not available.
Finally, there is of course the option to combine both the hospital cover and ancillary cover together to give yourself greater protection and all-around cover. A combined Hospital and extras cover allows you to customise your cover, and you can mix and match how you need. For example, you may only want mid level hospital cover but need top extras because you have three children who all need ongoing orthodontic work.
Choosing the right health insurance policy
When looking at buying health insurance, it's important to see how much you will get back for a particular treatment. You will also want to find out what the overall limit is that you can claim in a year.
Know your limits
Some policies will combine the maximum limits. For example, they may tell you that you can have $500 worth of physiotherapy and chiropractic in a year – that's $500 shared between the two different treatments, not $500 each. Also, it is worth looking into the details of family limits and single limits. Some policies may limit the amount of times that a family can claim for some services and treatment.
Cover you don't always need
There are lots of extras and benefits offered by funds that vary from ambulance cover and treatment at their own dental or optical clinics – these extras are sometimes deal breakers for some people, so it's always a good idea to check whether the policy is suited to your needs.
Getting the cover that's right for you
The main thing to look at when trying to find the right health cover for you is your budget and lifestyle. For example, if you're young and on a low income, take out a basic package. You can increase your options later as needed, don't pay for unnecessary cover.
What are waiting periods?
Waiting periods after joining a fund. There is a certain amount of time after signing up for your cover that you have to wait before your health insurance cover comes into effect. Waiting period varies from policy to policy. However, if you have an accident after you take out the policy, you will normally be covered and your insurance should be able to cover you for any hospital stay and/or treatment that you receive.
Waiting periods after switching funds. Another key point is that if you are changing your policy from one health fund to another, you will not have to endure any waiting time as you would've already done so when you signed up for your original policy.
What are maximum waiting periods? Maximum waiting periods were brought in by the Australian government to stop health funds from excluding members unreasonable amounts of time. The maximum waiting periods that health insurers can apply are:
Always check the fine print
It is vital to make sure that you fully understand all of the ins and outs of any policy that you are getting into. You will want to ask your fund a few things before you decide whether you are going to sign up with them for their private health insurance cover:
- Who is covered by a family policy? Family cover will almost always include your partner and any children who are under a certain age. The maximum age can vary from anything from 16 to 23 depending on the policy. Also, if your child is a full-time student and is under 25, they may be eligible to be covered on the family policy.
- Does the insurer offer discounts or benefits? Some insurers offer loyalty bonuses, the longer you have been with them the greater the discount.
- Are there additional costs for specifying your doctor or hospital? Ask your fund whether there are any extra charges if you specify the private hospital you are treated, and/or if you choose the doctor.
- What are the waiting periods like? Also, ask them if there are any waiting times that will apply to your policy after you sign up. Some policies have up to a maximum of 12 months.
- What Extras are covered? You will also want to ask your potential fund about your hospital, ancillary and ambulance cover. Here are some of the questions you might want to consider asking them.
- Are any of the treatments only available at public hospitals, are any of the treatments excluded and could you end up being a private patient in a public hospital?
- Does your local hospital – or the hospital you want to be treated at – and your doctor have an arrangement with the fund?
- With excess, do you have to pay the excess once or multiple times if you are admitted to hospital?
- With co-payments, how many payments would need to be made and how much would these payments be?
- Even if you are "100% covered" are you going to need to pay any extra costs during your stay in hospital?
- Are there any treatments not fully covered or limited in scope?
- If you are going to receive any extra benefits, what are the extra costs that you will be charged every year and is the cost per membership or per person?
- Be sure to find out whether the extra benefits cost a percentage of any fee that is charged or if it is a percentage of a "reasonable fee" set by the private health insurers – this can sometimes be a trap, as your extras can end up costing a lot more than they should if you are paying a percentage of a fee set by your fund.
- Ask your fund if any of the providers of the extra services need to be either registered with the appropriate state board or if they need to actually be registered with your fund. If you are looking to receive a particular benefit, such as massage therapy, and you have a certain practitioner in mind, you will want to check with your fund whether you will be able to be treated by them on your ancillary cover. Otherwise, you could end up getting ancillary cover that you can't use and is totally useless to you.
- Ambulance cover is another type of cover that is normally offered with hospital cover and sometimes even with ancillary cover. However, this type of cover can be very different depending on the fund.
How and when are you going to pay your premiums is an important thing to know. Why?
- Discount for convenience. Some providers offer discount if you set up a direct debit because you are affectively lowering the administration needs of your policy.
- Paying by the month. If you're young and carefree and can't afford to pay your premiums in a lump sum, you'll probably pay your premiums by the month. While this means that there isn't one big hit to your hip pocket, you'll end up paying more in the long run.
- Paying your premiums annually. Conversely, if you pay your premiums annually you will pay less than the person paying monthly because of the lack of administration.
Money saving tips
- Avoid the MLS by taking out private health insurance. If you earn more than $90,000 (or $180,000 if you're a couple/family) then you'll pay a minimum 1% surcharge of your annual income to Medicare, on top of the 2% Medicare levy. However, you do not have to pay the MLS if your family income exceeds the threshold but your own income for MLS purposes was $20,896 or less. You can also avoid this charge by taking out hospital insurance.There are a few different ways you can save money by being aware of the different options and offers available.
SinglesFamilies ≤$90,000≤$180,000 $90,001-105,000$180,001-210,000 $105,001-140,000$210,001-280,000 ≥$140,001≥$280,001
Standard Tier 1 Tier 2 Tier 3 < age 65 27.82% 18.55% 9.27% 0% Age 65-69 32.46% 23.18% 13.91% 0% Age 70+ 37.09% 27.82% 18.55% 0%
Medicare Levy Surcharge
All ages 0.00% 1.00% 1.25% 1.50%
- The earlier you take out cover, the better. This point is two fold. First, generally the younger you are, the healthier you are, and so your premiums are less. Second and more importantly, taking out cover later means that you'll be affected by the Lifetime Health Cover loading.
Lifetime Health Cover loadingThe Lifetime Health Cover (LHC) is a Government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover. If you haven't taken out private health insurance by the 1st of July following your 31st birthday, you will pay a 2% loading on top of your premium for every year you are aged over 30. The 2% surcharge is applied every year up to a maximum of 70% – for example, if you sign up at 45 you will pay 30% more than someone who joined up at the age of 30.
- Consider the excess. You can save a fair amount of money by having an excess on your policy, meaning you have to pay a certain amount of money for staying in a hospital before your private health fund pays anything.
- Private patient in public hospital. By only being covered as a private patient in a public hospital, you can find a cheaper policy.
- Consider co-payments. Another way to save on your policy is by paying a co-payment if and when you go into hospital. Every time you receive a service, you pay an agreed amount, which is usually a set amount per day for a certain number of days whilst you are in hospital. For example, if you have a co-payment of $100 for 3 days, you'd pay $100 for the first 3 days that you are in hospital and then after this time, you will be covered for the rest of your stay by your health insurance.
- Excluding certain treatments. By choosing a policy that does not cover treatment for certain conditions (conditions that are covered by public health insurance), you can save money.
- Rebates. Another thing to keep in mind is that if you spend more than $1500 on your medical costs, you can claim a 20% tax rebate.
What does 'gaps' mean?
When it comes to health care, a 'gap' is the amount you pay either for hospital or medical charges that are more than what you get back from your private health insurer or Medicare. Luckily, there are some private health insurers that have gap cover arrangements to insure against some or all of these additional payments.
- Have you looked around? You can compare you options in many ways by going into private health insurers store fronts, speaking with them on the phone or by comparing policies online.
- Does the policy allow you to choose your own doctor? If this is important to you, this is a very easy benchmark to set, in order to whittle down the list. You can use any or multiple benchmarks to cut down your list to only a few providers.
- Does the cover suit your needs? Have a checklist of items you want cover for. For example, does the policy cover:
- Ambulance fees
- Chiropractic treatment
- 'Complementary' therapies such as acupuncture
- Dental care
- Home nursing
- Hospital expenses in a private hospital
- Physiotherapy, occupational, speech and ocular therapy
- Pharmaceutical costs
- How much is it going to cost? By this time (after all your research) you should be able to anticipate your costs, roughly, include the premium, deductibles and any co-payments.
- Have you spoken with someone in the know? Most private health insurers offer different tiers and combinations of cover. Speak with an advisor about getting the cover that is right for you and your family.
Here are a few quick steps which should organise the switching process for you and make it slightly easier to understand:
- If you are going to go ahead with switching funds, you'll want to get a detailed quote from the fund you want to switch to and check that everything is what you need – make sure you check the applicable government rebate and any discounts that you can take advantage of, such as signing up for lifetime cover.
- Next, you will want to apply for cover with the new fund that you want to switch to.
- Tell your new fund that you would like your new cover to start as soon as your old cover is cancelled.
- You will also want to request a clearance certificate which shows your membership level and your lifetime cover status. Also, you'll want a statement from your old fund which has a list of any claims that you have made and keep a copy of these before you send them off to your new fund.
- Then, arrange a cancellation of your old cover by contacting your old fund.
- You will then need to check your bank statement to ensure that your new fund has started and that your old fund has ended.
- Finally, if you pay via direct debit, you'll need to cancel it with the old fund and also let your bank know that you want to cancel it.
If you are having problems switching your fund and you can't resolve the problem with the fund, you can try contacting the Private Health Insurance Ombudsman on 1800 640 695 or you can check out their website www.phio.org.au.
FAQs about private health insurance
Do I have to wait for my private health insurance to become active?
You may have a waiting period after you sign up for your private health insurance to become active. On some occasions, certain features of your cover may be active whilst others have certain waiting times. The reason that this system is in place is so people don't abuse the insurance by signing up and (for instance) using their cover for an operation and then ending their insurance after their treatment is over.
If you are switching between funds, you shouldn't have to serve a waiting period again as you would have already had a waiting time when you originally signed up for your private health insurance cover.
Can I receive the Federal Government Rebate?
If you are someone who has a blue or green Medicare card, then you should be able to get a minimum 30% rebate on the cost of your private health insurance from the Federal Government as long as your insurer is registered. If you are aged between 65-69 you will receive a rebate of 35% whilst people over 70 with receive a 40% rebate.
As of 1 April 2014, the Government's contribution to an individual's private health insurance rebate would be indexed annually by the lesser of the actual increase in the premium charged by insurers or the Consumer Price Index (CPI).
If I have a pre-existing ailment, will it affect my waiting period?
If you are someone who has a pre-existing condition (which basically means that you have a condition or illness six months before you take out any insurance) and someone who has a pre-existing ailment but doesn't know yet as it hasn't been diagnosed, you could find yourself waiting 12 months for your private health insurance to become active.
What is an excess and co-payment and should I use one of these options with on policy?
Excess and co-payments are options that can bring down your private health insurance premium quite a lot. An excess is the amount of money that you will pay towards the hospital and your treatment. It could either be applied every time you are admitted to hospital or once in a year (or any other period of time), depending on the policy.
A co-payment is the amount of money that you would pay if you are admitted to hospital and then treated. For example, you may have a co-payment arrangement of $50x5 meaning that you would pay $50 for only the first 5 days that you are in hospital and then after that, your private health insurance would cover the rest of your stay.
If you're someone who wants to get one of the cheapest plans available, an excess or co-payment arrangement is one possible policy you could look at. It is also a good choice if you are someone who is young and healthy. If you are confident that are in very good shape and you won't be heading in to a hospital that often, this is a good choice for you. Under the co-payment system you will still be covered if you ever need the treatment, but you will need to pay some of the bills and costs when/if you are treated, and your insurance will pay for the rest. Contrast this with a plan with no excess or co-payment option: your premiums will be larger but you will also be fully covered, i.e., you won't have to pay any of the treatment charges when/if you're hospitalised.
What is lifetime health cover?
If you are someone who signed up for your private health insurance before 1 July 2000 or before 1 July after your 31st birthday (and you have had hospital cover ever since then) you will have a lifetime health cover for the rest of your life. Under this arrangement – known as the lifetime health cover of the age of 30 – you are covered for private health insurance, which means you will have the lowest premium possible for you.
If you are someone who signed up for your cover after 1 July following your 31st birthday, you will have a 2% surcharge added to your premium each year. However, after 10 years of having hospital cover with your private health insurance, you will be able to have a lifetime health cover of the age of 30, meaning you'll be on a great premium for the rest of your life.
Finding a private health insurer
The following table gives you an overview of some of the private insurance companies in Australia. Of course, there are other smaller companies who do provide private health insurance as well, but you can get a good idea from the following data:
|ACA Health Benefits Fund||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|ahm Health Insurance||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Australian Unity Health Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Bupa Australia Pty Ltd||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|CBHS Health Fund Limited||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|CDH Benefits Fund||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Central West Health Cover||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|CUA Health Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Defence Health Limited||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Doctors' Health Fund||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Frank Health Insurance||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|GMF Health||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|GMHBA Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Grand United Corporate Health||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|HBF Health Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|HCF||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Health Care Insurance Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Health Insurance Fund of Australia Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Health Partners||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|health.com.au||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Latrobe Health Services||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Medibank Private Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Mildura Health Fund||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|National Health Benefits Australia Pty Ltd (onemedifund)||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Navy Health Ltd||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|NIB Health Funds Ltd.||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Peoplecare Health Insurance||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Phoenix Health Fund Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Police Health||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Queensland Country Health Fund Ltd||Open|
|Railway and Transport Health Fund Limited||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Reserve Bank Health Society Ltd||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|St.Lukes Health||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Teachers Health Fund||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Transport Health Pty Ltd||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|TUH||Restricted||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
|Westfund Limited||Open||ACT, NSW, QLD, SA, TAS, VIC, WA, NT.|
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