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Comparison of the week: Health insurance changes

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Health insurance policies are going to change on 1 April. We give you the "before" and "after" on what's really happening.

We compare virtually everything at Finder and our Comparison of the Week isn't afraid to tackle the big questions. This week we look at the incoming changes to the private health insurance industry and how your cover will be affected come 1 April 2019.

For many of us, just reading the words health insurance is an invitation to stop listening and go into a deep sleep. But if there was ever a time to try and stay awake and play along, this is it. Do you have health insurance right now? Are you thinking about getting it? In either case, there are a couple of key things to know.

First: health insurance premiums are going to cost more very soon, jumping by an average of 3.25% on 1 April 2019.

Second: if you already have health insurance there are going to be some big policy changes coming your way thanks to the private health insurance reforms.

The essentials

If you saw the above phrase "private health insurance reforms" and thought to yourself, "what's that?" you're not alone. According to a survey conducted by Finder, roughly 7 million insurance members were unaware of the changes to hospital product tiers that come into effect on 1 April 2019. And while the changes to hospital product tiers are the biggest reform coming into effect on 1 April, they're not the only changes of which you need to be aware.

The comparison

Come 1 April 2019, there are five big changes that will affect a range of Australians with both hospital and extras cover. Some of the changes should be good, while others are already catching some flack (*cough* removal of natural therapies *cough*).

ReformBefore 1 April 2019After 1 April 2019
Natural therapiesUp until 31 March 2019, you can claim for a range of natural therapies including aromatherapy, pilates and yoga on your extras policy.1 April 2019 sees the scrapping of benefits for 16 commonly claimed natural therapies following a 2015 government review which concluded that these treatments were not effective in treating or curing disease. From 1 April you will no longer be able to claim for:
  • Alexander technique
  • Aromatherapy
  • Bowen therapy
  • Buteyko
  • Feldenkrais
  • Western herbalism
  • Homeopathy
  • Iridology
  • Kinesiology
  • Naturopathy
  • Pilates
  • Reflexology
  • Rolfing
  • Shiatsu
  • Tai chi
  • Yoga

It's hoped that by stopping health funds from having to pay out hundreds of millions in benefits for these services each year we'll see a reduction in year-on-year premium increases.

Discounts for under 30sEvery person in Australia pays the same amount of money for the same level of health insurance cover, no matter your age, health or sex.From 1 April 2019, health funds will be allowed to offer a discount from between 2% to 10% to members under the age of 30 who take out an approved hospital policy. Best of all, the discount remains in effect until you turn 40.

While health funds now have the ability to offer these discounts, they are not required to. So, if you're under 30 it'll definitely pay to compare your options and find a fund offering age-based discounts.

Product tiersBefore 1 April this year, hospital policies fell into four categories: top, medium, basic and public. However, there was some ambiguity over what was provided by policies at each level.After 1 April this year, hospital policies will now fall into one of four new product tiers: gold, silver, bronze and basic. Policies will not only need to meet minimum standards to be classed in a certain tier, these products will also be accompanied by simplified fact sheets and standard clinical definitions. However, silver, bronze and basic tiers will be permitted to offer "Plus" products that offer cover for benefits outside of their tier, which may muddy the waters for consumers comparing products.

While these product tiers technically roll out on 1 April 2019, health funds do have until 1 April 2020 to make sure that their products are compliant.

Important. You will need to keep an eye on this because your policy may change, for example, you may gain or lose benefits, or worse still, your policy will be terminated and you'll be transitioned to a new policy.

Maximum excessUntil 31 March 2019, the maximum excess payable on a hospital policy is $500 for singles and $1,000 for families.Starting from 1 April 2019, the maximum excess payable for singles will jump to $750 and $1,500 for families.
Improved access for regional and rural AustraliansTravel and accommodation benefits only covered under comprehensive extras policies.Health funds will now be permitted to offer travel and accommodation under their hospital policies. This will be of great benefit to both regional and rural Australians who need to travel great distances to receive treatments and will improve the value for money they get from their policy.

The lowdown

This is where I get to give you the cop-out line about whether or not these changes will be good by saying, "it really depends on your situation". However, if you're under 25 and have a hospital policy, you're going to be able to save some decent coin, what with your 10% annual discount and the added option of raising your excess to lower your annual premium. On the flipside, if you were used to claiming for your weekly pilates sesh, then these changes are a bit of a kick in the pants. Comme ci, comme ça.

In any case, what you are going to want to do is compare your policy side-by-side with its new iteration to see what is covered before and after the changes. If you're better off then winner winner, chicken dinner. If you're worse off, get out there and start comparing your options.

Catch up with more of our weekly comparisons, or do your own by heading to the Finder home page to compare credit cards, savings accounts, shopping deals and much, much more. Go on, be a Finder.

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