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Private health insurance reforms: Transitioning to new hospital tiers

How will the transition to a Gold, Silver, Bronze or Basic tier affect you?

Finding and comparing health insurance cover can be complex, which is why under the recently announced health insurance reforms Australia will be transitioning to a new tiered system.

The reforms, which were announced by the Australian government in October 2017, will see a new tier system for health insurance come into effect as of 1 April 2019. The change is intended to simplify the current system by placing policies under a specific classification: Gold, Silver, Bronze and Basic. The new tiers are designed to make shopping around for a better deal easier.

But what does this mean for your existing policy?

What's changing

Creating the four-tier system – Gold, Silver, Bronze and Basic – improves upon the current approach because each tier will cover certain and specific medical procedures. In other words, there will now be standardised clinical categories for medical treatments.

Also, the reforms will introduce standard terms for medical treatments, cutting out the confusing medical jargon. This will apply to all tiers and includes both hospital and general treatment.

Insurance companies will also be required to provide members with a one-page informational sheet explaining what is and what isn't covered by the policy.

How will this affect you?

These changes simplify the current system and make shopping for private health insurance more convenient. Because you'll know what comes under, say, a bronze policy, you can compare insurers like for like, making it easier to scout out the best deal. Similarly, by implementing standardised clinical categories for treatments, it'll be much easier for you to know what is and isn't covered in a policy.

Nevertheless, the requirements for each product tier are minimum standards so insurers will be able to offer additional coverage in Basic, Bronze and Silver tiers. If insurers already provide additional coverage in low- and mid-level products, the new categories don't require insurers to reduce that coverage.

Because the new tiers are minimum standards, there will also be plus categories – silver plus [+], bronze plus [+] and basic plus [+] – which will allow insurers to offer cover above the minimum requirements. Importantly, it will also allow providers to make minor upgrades to policies that include restrictions or exclusions to ensure that you continue to enjoy the same level of cover after 1 April 2019. If you are worried about changes to your policy, changes won't happen overnight. Insurers have until 1 April 2020 to adopt the tiers for all their products, so there's plenty of time to upgrade or change your coverage.

The changes will also benefit women with breast cancer, as all medically necessary breast surgery will be included in Bronze tier hospital cover. Women will also have access to gynaecology in Bronze.

Will it impact your wallet?

The move will greatly benefit consumers and help eliminate medical professionals and insurers charging over the odds. Because it will require insurers to be more transparent, the industry will inevitably become more competitive. Although it's likely to create a more level playing field, it also means you're likely to find some great deals out there with insurers fighting for customers. One thing's for sure, with greater transparency and clarity, you're guaranteed to get better value for your money.

Why is it changing?

Over half of the Australian population has private health insurance. Despite this, finding cover can be complicated and frustrating. For every good policy, it seems like there's a bad one. That's why the government has stepped in.

Consumers face a great amount of difficulty when trying to compare private hospital insurance products. Are you getting the cover you think you've paid for? Are you properly covered for certain medical treatments? The implementation of the four-tier structure aims to answer these questions and alleviate these fears. It will help us understand policies more clearly, as well as what is and isn't covered.

When is it changing?

The change will come into effect on 1 April 2019. Although it might seem soon, the government has been working with private health insurance services since October 2017. It's taken them that time to come up with and finalise standardised categories for the huge list of medical treatments Australian healthcare provides.

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What else is changing?

These reforms are part of a major overhaul by the government targeting private health insurance more generally. As well as the introduction of the four-tier system, there will be:

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Picture: Unsplash

Gary Hunter

Gary Hunter is a writer at Finder, specialising in insurance. He has a Bachelor of Arts in English Literature from the University of Glasgow and has previously worked for Real Insurance as a content specialist. Gary loves language, the way it has the ability to engage, entertain and anger people, and always aims for the first.

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