Choosing Health Insurance

Choosing the right health insurance policy

Not sure what you need from health insurance policy? What you can expect from each tier of health cover.

Private health insurance offers a crucial financial safety net to help cover the medical costs that Medicare doesn’t. Having some level of cover in place is essential for every Australian, but with so many policies to choose from, how do you know which health insurance policy is right for you?

With a little bit of research and a willingness to compare your options, you can find private health insurance cover that meets all your needs.

Make the right choice and compare online or with help from an adviser

Comparing health funds and deciding who to go with

There are dozens of private health funds in Australia competing for your business. Keep the following factors in mind when deciding on the right health fund for you:

  • Annual limits. Extras policies feature annual limits, which place a cap on how much you can claim each year for specific services. Make sure to compare annual limits between funds to find out the extent of cover provided, and also check whether the limits listed apply per person or per policy.
  • Product bonuses and special features. Many health funds offer a wide range of extra benefits to their members as part of their cover. These could include gap-free extras services for kids, eyewear and dental discounts, discounts at retail partners, and a range of health management programs to help you stay in shape.
  • Restricted membership funds. Some health funds restrict membership to people from a certain occupation, for example police or transport employees. If you are eligible for one of these funds, you may be able to take advantage of lower premiums.
  • Consider the cover you need. The main factor to consider when determining which health fund is right for you is determining exactly what you want from your health insurance. Assess your budget, your lifestyle, the health risks you face and the benefits offered by competing health funds to help make your final decision.

Selecting the right policy

There are three different types of private health insurance cover available in Australia: hospital cover, extras cover and ambulance cover.

Hospital cover

Hospital cover allows you to receive treatment as a private patient in a private or public hospital. This includes cover for hospital accommodation, theatre fees, intensive care, in-hospital pharmaceuticals, diagnostic tests and doctors’ fees. You also get the freedom to choose your own doctor or specialist and you will avoid lengthy public hospital waiting lists.

Although the exact policies offered vary between insurers, you will typically find at least four levels of hospital cover:

  • Public hospital. The most basic level of cover available, this type of policy provides minimum benefits for treatment in a public hospital only. This type of cover is perfect for those on a tight budget.
  • Basic hospital. These policies cover private hospital treatment for a wide range of services but exclude high-cost services such as cardiac-related procedures, rehabilitation and psychiatric services. Basic hospital cover is typically targeted at young, fit and healthy people.
  • Medium hospital. Medium private hospital cover provides cover for a wide range of in-hospital procedures but excludes or restricts services such as hip replacements, pregnancy and major eye surgery. Medium hospital cover is suitable for those who want a combination of affordable premiums with a broad range of cover.
  • Top hospital. The highest level of hospital cover available, this type of policy covers all in-hospital services where Medicare pays a benefit. Older Australians generally benefit from the comprehensive cover top hospital cover provides.

Extras cover

Extras cover is designed to provide cover for a wide range of general health care services that are not covered by Medicare. A basic extras policy covers benefits such as optical, physio, chiro and general dental, while high-level policies include cover for treatments such as orthodontics, podiatry, speech therapy, occupational therapy, health management programs and much more.

You will also find the following levels of extras cover:

  • Comprehensive extras. This type of policy usually includes cover for general and major dental, endodontics, orthodontics, optical, non-PBS pharmaceuticals, physiotherapy, podiatry and psychology. It’s perfect for those who want the highest level of general treatment cover available.
  • Medium extras. A medium extras policy includes cover for general and major dental, endodontics and at least five of the following: orthodontics, optical, non-PBS pharmaceuticals, physiotherapy, podiatry and psychology. It combines a broad range of cover with more affordable premiums.
  • Basic extras. All other extras policies fall into this category. Basic extras policies are usually designed for the young and healthy.

Ambulance cover

Ambulance cover is designed to provide cover for the cost of emergency ambulance transportation and treatment in Australia. This is available either as a standalone policy or it’s often included as part of an extras cover policy. You also may have the choice of basic or comprehensive ambulance cover.

Some funds will also offer two levels of ambulance cover:

  • Emergency ambulance. These policies provide cover for emergency ambulance treatment and transportation, for example, following a heart attack or major accident.
  • Comprehensive ambulance. Comprehensive ambulance policies cover ground and air ambulance transport.

Combined cover

You can take out any one of the above policy options as standalone cover, or you can choose a combined policy that provides hospital, extras and ambulance cover all in the one package. This allows you to take out comprehensive cover for a wide range of medical and health care services.

Choosing the right health insurance at the right level of cover

Details to be aware of before signing your policy

To make sure you're choosing the right health insurance, be sure to check these final key points before you sign on the dotted line:

  • Excesses and co-payments. If an excess applies to your hospital cover, it means you’ll need to pay that excess amount whenever you are admitted to hospital. Other policies can feature a co-payment, which is a daily fee you must pay during the time you are hospitalised. Many policies also offer the option to lower or reduce your excess or co-payment in return for more expensive premiums.
  • Waiting periods. All health insurance policies feature waiting periods, which are the lengths of time you will have to wait after taking out cover before you are eligible to claim a benefit. Waiting periods can range from 2 to 36 months for certain services, so make sure you’re aware of all the relevant waiting periods before joining a fund.
  • Check the fine print. The last step is to make sure you have read all the fine print provided by your health fund about the policy you plan to take out. This will allow you to work and what is covered, what’s not covered, who is covered and any benefit limits that may apply.

Need help choosing the right health insurance? Compare your options with the help of a broker or online.

Picture: Shutterstock

Richard Laycock

Richard is the insurance editor at finder.com.au. He is on a mission to make insurance easier to understand.

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