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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 has begun transitioning to a new tiered system.

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.

You can already start purchasing insurance policies that fit into these tiers. However, not all insurers currently offer them since they have until 2020 to bring their policies fully in line.

So what does this mean for your existing policy?

What's changing

The four-tier system – Gold, Silver, Bronze and Basic – improves upon the old approach because each tier covers certain and specific medical procedures. In other words, there are now standardised clinical categories for medical treatments.

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

Insurance companies are also 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 old system and make shopping for private health insurance more convenient. Because you'll now 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 can offer additional coverage in Basic, Bronze and Silver tiers (Gold already has everything you can possibly get). 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 are also plus categories – silver plus [+], bronze plus [+] and basic plus [+] – which allows insurers to offer cover above the minimum requirements. Importantly, it also allows providers to make minor upgrades to policies that include restrictions or exclusions to ensure that you continue to enjoy the same level of cover as you may have had before.

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 cover.

The changes 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 greatly benefits consumers and helps eliminate medical professionals and insurers charging over the odds. Because it requires 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 helps us understand policies more clearly, as well as what is and isn't covered.

When is it changing?

The change came into effect on 1 April 2019 and the government has been working with private health insurance services to implement these changes 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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