Is a not-for-profit fund right for me?

Before you rush out to look for a not-for-profit health fund to join, you should keep the following things in mind. Previous employment in an industry can go back a number of years, so you may be eligible to join a restricted fund even if you haven't worked in an industry for some time. While most restricted funds are open to family members, this may be limited to immediate family only (ie, spouse and dependent children). Membership of a restricted health fund can sometimes also give you access to other member benefits like industry super and life insurance. Cheaper premiums should only be one consideration when looking at not-for-profit health funds. You also need to ensure the level of cover on offer is adequate for your needs. Not all not-for-profit funds will be cheaper, it's always important to shop around for the best deal, whether it's a not-for-profit or a for-profit fund.

Are not for profit health funds cheaper?

Not-for-profit funds can be cheaper than for-profit funds, but it's not always that simple. While not-for-profit funds use profits to lower premiums, they tend to be smaller than for-profit funds. This can affect its ability to lower costs. Even so, not-for-profit funds are generally competitive on price.

What are some of Australia's most popular not-for-profit funds?

HCF, HBF, Nurses & Midwives Health, Police Health and Emergency Services Health.

Compare Not-for-profit health funds in Australia

Who’s this health cover for?

Not-for-profit health funds don't have shareholders, so they use extra funds to save members money.
Joining some funds is restricted to people working in certain industries and their families.
Not-for-profit health providers aren't all that different on average for customers.

What is a not-for-profit health fund?

A not-for-profit health fund is a fund that is run for members, not shareholders. Theoretically this means all premiums paid into the fund are put towards improving services, reducing premiums, and paying operating costs.

Many not-for-profit health funds are 'open funds' that anyone can join. These include HCF, Frank Health Insurance, and Westfund. Some others, like Teachers Health and Defence Health, restrict membership to people who work in certain companies or industries and their families.

Not-for-profit vs for-profit health funds

The main difference between the two types is how the funds aim to use the money they make.

Different business structures. A not-for-profit is a mutual organisation owned by policyholders and members, while for-profits are corporations with owners and shareholders.
Profits go to members, not the bottom-line. Not-for-profit funds are designed to allocate a larger ratio of revenue to their members in the form of cheaper premiums, rebates and benefits - rather than dividends or shareholders.
Policyholders are the priority. With all profits returned to the fund, members can often find better benefits and extra flexibility in their policy.

Are not-for-profit funds better?

There doesn't appear to be a huge material difference for customers.

According to the Ombudsman data, not-for-profit funds get fewer complaints and retain more of their members, but have slightly higher hospital charges and gap fees paid on average. For-profit health funds cover around 1% more extras on average.

However, depending on what not-for-profit or for-profit fund you're with, your mileage will always vary. Larger funds might have more bargaining power with providers and more financial assets to cover services. Plus, how well a fund is managed could play a bigger role in value for money than the business model.

It's always smart to shop around and compare different health insurers, because the differences can be significant.

Results are an average of all health funds in each category

NFP vs FP
Type	FP	NFP
How much revenue goes to benefits	80.04%	80.53%
Revenue paid to management costs	10.52%	13.6
Member retention (hospital cover)	85.44%	87.14%
Complaints compared to Market share	1.3	0.7
Hospital charges covered	87.74%	90.71%
Medical services with no gap	88.10%	88.53%
Medical services with no gap or known gap payment made	95.96%	97.57%
Extras charges covered	50.82%	49.96%

Every not-for-profit health insurer in Australia

Open membership

Closed membership

FAQ

Before you rush out to look for a not-for-profit health fund to join, you should keep the following things in mind.
- Previous employment in an industry can go back a number of years, so you may be eligible to join a restricted fund even if you haven't worked in an industry for some time.
- While most restricted funds are open to family members, this may be limited to immediate family only (ie, spouse and dependent children).
- Membership of a restricted health fund can sometimes also give you access to other member benefits like industry super and life insurance.
- Cheaper premiums should only be one consideration when looking at not-for-profit health funds. You also need to ensure the level of cover on offer is adequate for your needs.
- Not all not-for-profit funds will be cheaper, it's always important to shop around for the best deal, whether it's a not-for-profit or a for-profit fund.

Sources

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Written by

Cameron Thach

Writer

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With a background in writing across education, Web3, and finance, Cameron’s mission is to create content that speaks directly to readers in a way that’s easy to understand, helping them navigate complex topics with confidence. Cameron studied a Bachelor of Commerce, Economics and Marketing at Macquarie University, graduating in 2019. See full bio

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