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Introduction to Health Insurance
What exactly is Health Insurance?
In Australia there exists a dual system of health care provision. Medicare is Australia publicly funded universal health care system, and provides to all Australian citizens and permanent residents partially subsidised treatment from medical practitioners and fully subsidised treatment in public hospitals. While still entitled to receive treatment through the Medicare system, many individuals, couples and families in Australia elect to purchase private Health Insurance. This provides peace of mind as members are covered for medical fees which are not met by Medicare reimbursement. Similar to other forms of insurance, health insurance involves the insured member or group paying regular sums of money, or premiums, to the health insurance fund, usually on a monthly basis, to ensure that benefits are available in case of high or unexpected healthcare expenses. Currently, over 40% of Australians belong to a private health insurance fund.
What are the benefits of Private Health Insurance?
Aside from providing peace of mind in times of illness or injury, accessing the private health system can give members the option of choosing their own hospital, their preferred doctor or specialist and also to nominate when they are treated. You can elect to purchase hospital cover, extras / ancillary cover, or a packaged cover combining both of these.
A
Hospital cover
policy allows members to be treated in public hospitals, and private hospitals within their health fund network, as a private patient and generally covers treatment by your doctor and in-hospital expenses such as accommodation, theatre fees as well as providing improved hospital accommodation, such as private rooms, where available. Importantly, private patients face shorter waiting periods to receive treatment for elective (non-urgent) surgery and other procedures for which there exists long waiting lists in the public system.
Extras (or ancillary) cover provides benefits to be paid for a range of non-hospital services for which Medicare provides either no or only a very limited reimbursement. Such services include optical and dental treatment, and physiotherapy, as well as specialist therapies such as chiropractic treatments and Chinese medicine.
Extras cover is usually available separately to hospital cover, but is most commonly purchased together with hospital cover as a Combined or Packaged cover policy.
Most health funds allow applicants the flexibility to pick and choose which hospital and extras treatments they would like their policy to cover, helping to offer a more affordable policy and one tailored to their needs. Help Me Choose can assist you in this process, giving you the option to search for either only a hospital or extras cover policy, or a packaged cover policy, and presenting to you a selection of products for comparison that include insurance coverage for the treatments that you choose as being necessary.
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What type of Health Insurance policy do I need?
Choosing the right policy is important to avoid being either over-insured, and paying unnecessarily high premiums, or under-insured, and being liable for hefty out-of-pocket costs. While we are all vulnerable to illness and injury requiring medical treatment, there are certain types of conditions which we are more likely or less likely to require treatment for, and thus insurance coverage for, depending on our age and current life status.
Therefore, it makes sense to choose a health insurance policy that suits your lifestyle and healthcare needs. Health insurance funds are flexible in allowing applicants to select which areas of treatment they would like to cover in their policy. For example, if you are in a couple and intend to have children, it would make sense to include pregnancy-related services in your selection of treatments under hospital cover. On the other hand, if you are young, single and unattached, you are less likely to need cover for pregnancy-related services or hip-replacement surgery, but should you be of impaired vision and a keen sportsperson, you may wish to include both optical services and physiotherapy in your cover.
When using Help Me Choose, you can select your current status, such as single or in a couple, and choose precisely which particular hospital and extras treatments to include in your cover, to help us to provide you with a selection of health insurance products for comparison that more closely match your needs.
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How can I save on health insurance?
While health funds offer full and comprehensive cover for hospital accommodation and treatment, there exist a number of methods to reduce premiums which can be arranged when purchasing health insurance products. Selecting only the specific treatments you would like health insurance cover for and excluding others is only one way of reducing your premiums. Other methods include:
- Agreeing to pay a set amount as an excess, or as a co-payment towards the costs of hospital treatment.
- Agreeing to receive restricted benefits for the treatment of certain conditions, whereby a reduced payment will be made by the health fund for treatment. This can be arranged to apply over an agreed period of time.
Health insurance in Australia is a competitive industry and consumers are free to change funds should they find a policy more suitably priced or matched to their needs. Changing funds needn penalise people who have fully or partially observed waiting periods to receive certain treatments as this is taken into account when joining a new fund. It is also worth noting that Australian consumers are able to purchase extras and hospital cover policies from two separate health funds and thus are not forced into staying with the one fund for both should they find, for example, an attractive extras policy offered elsewhere despite being happy with their current hospital cover.
The Federal government has introduced a number of initiatives in recent years to entice more Australians to take out health insurance, with the intention of ensuring the economic viability the public health system and the accessibility of public health services for less well-off Australians. These initiatives include Lifetime Health Cover, designed to reward Australian who take out health insurance earlier in life with lower premiums and the 30% Health Insurance Rebate available to members of health funds. The Medicare Levy Surcharge is an additional 1% tax put towards Medicare levied on those Australians earning over an income threshold who do not have an adequate level of private hospital cover.
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When does Health Insurance cover take effect?
Private health cover usually takes affect with the payment of the initial insurance premium. It is important to note that benefits may not be made available for treatment of conditions that are deemed to be pre-existing ailments or those treatments with established waiting periods, before a certain period of membership has elapsed, and it is recommended to check these conditions with the health fund. Significantly, couples planning for children should take into account such waiting periods when purchasing health insurance should they wish to utilise pregnancy-related services. Such conventions ensure the viable operation of health funds and help keep premiums to an affordable level.
It should be noted that policies that establish benefit limitation periods for certain treatments will likely add this agreed upon period to existing standard waiting periods before benefits are made payable. Contrary to what some people may think, when changing health funds, waiting periods for particular services already observed at previous funds are usually taken into account when signing new policies, and are not necessarily required to be waited again in full.
Under certain circumstances, many health funds are prepared to grant members a suspension of health insurance membership, and in these situations waiting periods already observed are taken into account when membership is resumed.
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