Which health fund pays the most benefits?
What percentage of member contributions does your fund pay back in benefits?
There are many ways to assess how well a health fund is performing, from a fund's market share to its annual revenue. However, most of the markers aren't all that useful if you're a consumer in the market for a new health insurance policy.
The Private Health Insurance Ombudsman (PHIO) has been publishing its annual State of the Health Funds report since 2004. In these reports, the PHIO looks at various markers for how well a fund is performing through the lens of a consumer. These markers include member retention, complaints and, importantly, benefits paid as a percentage of contributions.
In the report each year, the PHIO records the percentage of total contributions received by the fund and returned to contributors in the form of benefits.
Each year on 1 April, funds increase their premium rates to keep pace with rising health care costs and other factors. Generally, a fund sets its premiums so that the contributions it will receive from its members will cover the costs it expects to payout in the form of benefits over the coming year, plus administrative expenses.
The table below displays how health funds have performed historically, that is, the average percent of total contributions returned in benefits.
|Defence Health (Restricted)||90.61%|
|Doctors’ Health (Restricted)||82.55%|
|Navy Health (Restricted)||84.66%|
|Police Health (Restricted)||88.33%|
|Queensland Country Health Fund||80.50%|
|Reserve Bank (Restricted)||86.96%|
|RT Health Fund (Restricted)||86.24%|
|Teachers Health (Restricted)||92.88%|
While it is a good sign to see a fund returning a high percentage of contributions in the form of benefits, it is not always a positive. This is especially true if the fund is making a loss.
When looking at these figures, it's best to also review whether the fund is operating at a surplus and what its management expenses are, both of which will be addressed in future instalments.