Are you getting the most out of your extras health insurance?

Use it or lose it: Is it time to stop paying for health insurance extras?

New research shows that that over two-thirds of Australian health insurance policyholders are unsure what portion of their health insurance extras are not being used.

A national survey of more than 2,000 people showed that a potential $4.5 billion worth of health insurance extras are going unused at an average of about $550 per person.

If it feels like you keep paying health insurance premiums but you aren’t getting anything in return, then this might be why. The good news is that you can either start saving money or start using the benefits that you are entitled to.

Review your health insurance with an insurance consultant

Are you wasting your money on health insurance extras?

Before renewing your extras cover, ask your fund for a claims statement and then compare the amount claimed on extras with the amount spent on premiums. If you’re spending a lot more than you’re claiming, you probably don’t have a health insurance policy that’s right for your needs.

The following is a list of common health insurance extras found on most policies. How many of these do you actually use?

• General dental and orthodontics*
• Major dentistry
• Optical, for claiming glasses and contact lenses
• Physiotherapy, chiropractics and osteopathy
• Antenatal, postnatal and other birthing services*
• Pharmaceuticals*
• Psychology services*
• Occupational*, speech and eye therapies
• Naturopathy, acupuncture and other alternative medicines
• Health aids and appliances like hearing aids and wheelchairs

^{_{*These treatments are largely covered by Medicare when required, and are freely available to Australian residents even without a health insurance extras policy.}}

If you’re like most Australians with health insurance extras, you are paying for all or most of these but rarely, if ever, using them.

Even if you do use some of these, and claim the maximum amount possible each year, there’s still a very good chance that it’s simply not worth it. This is because of the restrictions and limitations of extras cover.

The restrictions and limitations of extras cover

To figure out whether you’re actually getting gouged by your extras policy, you need to know exactly how it pays benefits and what the limitations and restrictions are. Read your insurance policy’s product disclosure statement (PDS) and look for the following:

• Claimable benefits: Depending on your policy, you may be able to claim back a portion of the cost of an extras service, such as 60%, 80% or even 100% of the total cost. Other policies will let you claim set amounts for different treatments, like $30 for a dental check up. In both cases you are still most likely paying out of pocket for part of the total cost. If your health fund grants 100% money back on claimable extras services then it’s probably a much more expensive policy than most others.
• Limits: There is a maximum amount you can claim for certain benefits, such as up to $200 per year for general dental, or $300 per year for all naturopathy. Whether you get 60% or 100% cash back from your fund, it all counts towards the limit. These limits are usually higher in more expensive policies, and are often set up in such a way that you will always be spending more on premiums than the fund is paying in treatment costs.
• Excess: Health insurance extras often come with an excess. This is an extra fee you must pay when claiming benefits. For example, you might be required to pay a flat $100 excess whenever you want to claim something. Lower premiums usually means a higher excess, while some policies will let you opt for a low or nonexistent excess, but at the cost of higher premiums.

The only way to get a truly effective health insurance extras policy with good claimable benefits, high limits and a low excess is by paying much higher premiums. This may not be worth it.

An extras policy with low premiums, however, will likely be hamstrung by poor claimable benefits, low limits and possibly a high excess.

Using all the benefits you are entitled to

The first way the start getting better value for money from your extras is to start using more of them.

Use up all your extras. Taking advantage of them where possible should improve your overall health and wellbeing. If you simply aren’t interested in them, then consider downsizing your policy to save money instead.

Everyone is able to take advantage of the following:

• Dental cover. Use up your entire dental allowance every year, even if it’s only on plaque removal and teeth cleaning. Check whether your policy pays for cosmetic dentistry, and consider using it to subsidise crowns, bridges or dental veneers.
• Psychology. These treatments can provide help and support to anyone going through a rough time, or facing emotional or mental health issues. Don’t hesitate to take advantage of these services when you need to.
• Physiotherapy, chiropractics and osteopathy. These are all variations on physical massage therapy, and you don’t need to be injured to benefit. Aches, sore joints or back pains can be aided by these services. If you have cover for it, you should use it.
• Naturopathy and alternative medicine. This is an extremely broad area, and you can probably find something of interest here. A good way to use up your naturopathy allowance rather than let it go to waste is by visiting a traditional Chinese medicine practitioner. They can do their own diagnosis of potential health issues and serve as a gateway to a wide variety of claimable naturopathy and alternative medicine techniques.

If you decide to start using up your extras, remember to be aware of the limits, excesses and claimable benefits. There will most likely still be some costs involved.

Not everyone is interested in these benefits, and the best option for some people might be to simply cancel or downsize their health insurance extras policy to start saving money right away.

Switching health insurance

Health insurance is a competitive market, so changing funds or policies is fairly easy and routine. If you aren’t getting value for money from your current health insurance extras policy, your options here are to switch funds , downgrade your policy or simply cancel it.

• Switching funds: This may be a good option if you’ve found the right health insurance policy with a different fund. Simply apply as usual and fill in the relevant details with your current fund. The new health fund will request a clearance certificate from the old one to make it happen.
• Downgrading your extras policy: This refers to something like switching from the comprehensive platinum extras package to a bronze extras package with the same fund. You are generally able to do this at any time. Carefully check the terms, conditions and benefits of your new policy to make sure it’s more suitable than the previous one.
• Cancelling your extras: This is an increasingly popular option for people who want to manage their own health finances. This involves cancelling your extras policy entirely, paying no more premiums on it, paying no more excesses and managing your health care through Medicare and out-of-pocket costs. Remember that Medicare offers good cover for many “extras” like general dentistry, and it will cover a lot of essential medical expenses like orthodontics.

Every year that passes with unused health insurance extras and premiums that aren’t paying for anything is a year of wasted money. If you’re one of the two-thirds of Australians falling into this trap, then take control of it today and start saving.

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