What are waiting periods and when will your health fund waive them?
When looking for health insurance, one important factor to consider is what the waiting periods are for services you are most likely to make a claim for, such as dental and optical.
One popular tactic health funds employ to try and get new customers is to waive certain waiting periods.
What are waiting period waivers?
When you take out insurance there is usually a specified period of time you have to wait until you can claim any benefits. A waiting period waiver is where an insurer agrees to forgo the specified period, so you can make claims from the moment you take out a plan. Waivers are required by law when consumers switch health funds, providing they are switching to an equivalent level of cover.
If you are upgrading or switching your hospital insurance to a higher level of cover, an insurer can require you to serve a new waiting period before benefits are paid under your new policy.
For extras (ancillary) cover, the need to serve new waiting periods when switching cover is at the discretion of your new health fund.
Why do funds offer waivers?
Many insurers offer to waive some waiting periods for extras cover as an incentive to get you to switch funds. They will recognise any waiting periods you have already served with your previous fund.
However, it is important to read the product disclosure statement (PDS) carefully to see what types of cover you can access immediately. For example, with most insurers, you will not have to serve a waiting period for routine or preventative services such as dental check-ups, but will still have to wait before being eligible for more advanced treatments.
What type of waiting periods can typically be waived?
If a health fund is offering to waive waiting periods, generally these will be for basic ancillary treatments and services. It won’t usually apply to hospital cover waiting periods, such as those imposed for obstetrics, pre-existing conditions and major procedures.
It’s important to always factor in the waiting periods that apply to any policy you are considering. The amount of time you are without the cover you need has a direct influence on the value of the policy.
How long are waiting periods?
In the case of hospital cover, maximum waiting periods are prescribed by law and are as follows:
- 12 months for pregnancy and birth-related services
- 12 months for pre-existing conditions
- 2 months for psychiatric care, rehabilitation and palliative care
- 2 months for any other conditions
- No waiting period in the case of accidents
Waiting periods for Extras cover are not subject to government legislation and vary with each insurer, but typically they are as follows:
- 2 months for general dental and services such as physiotherapy, chiropractic and podiatry
- 6 months for glasses or lenses
- 12 months for major dental treatments such as crowns and bridges
- 1, 2 or 3 years for high-cost procedures such as orthodontics
Why are there waiting periods?
Health insurance in Australia is community rated, which makes it different from other types of insurance. Health insurers must offer cover to everyone at the same price, even if you have a preexisting condition. This prevents consumers from being discriminated against when seeking health insurance, but it would be prohibitively expensive for insurers if they had to insure everyone immediately, regardless of their health.
To provide themselves with some financial breathing space and to prevent people from only seeking health cover when they need it, insurers impose waiting periods to level the playing field for everyone. If they didn’t do this, premiums would rise dramatically, with the majority of fund members paying for the benefits of a few.