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Parliament approves private health insurance reforms

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Changes to health insurance aim to help consumers find the right policy.

It's finally happened. The private health insurance reforms that were laid out almost a year ago on 13 October 2017 officially passed on 11 September 2018. It's hoped that by passing this critical legislation, health insurance will become simpler and more affordable for all Australians.

So, what's changing?

Items on the docket include the following:

Discounted cover for the young

  • What's changing? Age discrimination has been legislated, and if you're between the ages of 18 and 29, you can get discounts on your health insurance premiums of 2% for every year you have hospital cover before the age of 30, up to a maximum 10%. This discount remains in place until you turn 40.
  • Why? It's hoped that discounted health insurance premiums might entice younger people to take out cover and balance out the risk pool, which in turn should curb the ever increasing cost of private health insurance.

New health insurance classification system

  • What's changing? Health insurance policies will now fall into a four-tier system: Gold, Silver, Bronze and Basic. In addition to this, products that meet and exceed the minimum standard can be labelled with a Plus (+).
  • Why? These coverage tiers mean that all policies within a tier must meet a minimum standard. This means that you'll be able to compare policies at a high level before digging a little deeper and getting into the nitty-gritty.

Maximum excess increase

  • What's changing? Currently, to avoid the Medicare Levy Surcharge (MLS), any single individual earning over $90,000 ($180,000 for families) needs to take out a private health insurance policy with a maximum excess of $500 ($1,000 for families) or get stung with a levy of between 1% and 1.5% of their taxable income.
    The changes will see that minimum excess increase from $500 for singles ($1,000 for families) to $750 for singles ($1,500 for families).
  • Why? It's hoped that higher excesses will mean lower health insurance premiums for those looking to avoid the MLS.

Simple and clear communication

  • What's changing? Health funds will be required to keep up-to-date "private health information statements" in the form of a single page of information that explains the products.
  • Why? The private health information statement is designed to take the guesswork out of knowing what is and isn't covered by a policy meaning clearer apples-to-apples comparisons.

Better cover for people living in regional Australia

  • What's changing? Hospital policies will now be able to cover the costs of travel and accommodation for those living in regional areas.
  • Why? It's hoped that these changes will provide support to people in regional areas who have to travel for treatment.

What does this all mean for you?

While you won't see any immediate impact these changes, as most of these reforms will not come into effect until April 2019 they will help you make a better choice when comparing products in the future.

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2 Responses

    Default Gravatar
    DonOctober 11, 2018

    I’m 80 years old. Why can’t we drop pregnancy and assisted reproduction with out dropping joint replacement and dialysis?

      JeniOctober 16, 2018Finder

      Hi Don,

      Thank you for getting in touch with Finder.

      Currently, treatments are grouped under levels. Sometimes you can speak to the insurer about getting a top policy that does not include obstetrics – it’s often called – Non-Obstetrics in the policy name, e.g. – premium hospital – Non-Obstetrics or top hospital – Non-Obstetrics.

      So with health insurance, there is no different policy or different price for all ages. They pick treatments and group them to decide what’s a top, middle and basic level of cover – it’s a bit tricky to customise a package on the whole. These changes are coming which should make it simpler. Please refer to our guide on health insurance tiers to learn more about this.

      I hope this helps.

      Please feel free to reach out to us if you have any other enquiries.

      Thank you and have a wonderful day!


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