If you’re considering private health cover for the first time, you probably have a lot of questions you want answered
Balancing your weekly or monthly budget is something we’re all familiar with. Adding any new expense requires sacrifice and compromise in other areas. If you’re thinking about getting health insurance, it might mean a change in your lifestyle to ensure you can afford it.
Australians in their 20s and early 30s face a variety of cost-of-living pressures. Whether it’s combining study with work or entering a full-time job or starting a family, things can change a lot in a short period.
Nobody wants to pay for something they don’t use or feel as if their money is going down the drain. Which is why many wonder if health insurance is actually worth it. Will it deliver on all the marketing promises and will you get the benefits and service you deserve?
Australians are right to ask about the real value of private health insurance.
Over the last few years people have dealt with increases in premiums while feeling like their cover hasn’t helped them when they needed it. You might have even heard about so called ‘junk policies’
So you might be wondering about your own situation and checking if private health cover will benefit you. If you feel you’ve got a good handle on the basics, why not take a quick Q&A with our new to health insurance tool.
In a couple of minutes you can find out if you’ll benefit from private health insurance. Or, if you want a few more facts before you take the quiz, here’s a rundown on the basics of health insurance.
Firstly, health insurance has the potential to provide you with more choice, control and peace of mind when it comes to your healthcare.
Currently, 50% of Australians hold a private health policy. Of course, even without health insurance all Australians have access to the public health system.
There are only two types of cover you need to keep in mind: Hospital cover and Extras cover. Each type pays benefits for different types of treatment you may need or just want to know you’re covered for.
Hospital cover – pays benefits toward the cost of treatment in hospital. It gives you control over:
– Who you’re treated by – some people prefer a surgeon recommended by their doctor
– Where you’re treated – access to a private hospital close to home and a more comfortable environment
– When you’re treated – because waiting times are usually shorter in the private system
The level of hospital cover you choose determines the types of procedures you’re covered for (like pregnancy or heart surgery). The higher the level of cover, the more procedures you will be covered for.
When a procedure is “covered”, that means 100% of the cost (minus any excess) of your hospital visit is paid by your health fund.
2. Extras cover – reduces the cost of treatment for things that Medicare doesn’t cover. This includes non-GP services like general dental, major dental, optical, physio and more.
Extras cover is all about your lifestyle and it can be the area where you save the most money and be confident that you’re paying for health insurance that you’ll actually use.
There are two different ways that health funds contribute to the costs of different services:
· as a percentage proportion of the fee charged by the provider (eg. 65% back from a dental consultation)
· as a fixed dollar per visit (eg. $30 per physio visit)
The most important thing you need to enquire about is the total annual limit your policy will contribute across different services. If you never use these types of services, then maybe extras cover isn’t a ‘must have’ for you.
Dealing with a specific health issue or condition often triggers people to consider private health cover
While you may feel in tip-top shape today, life has a funny way of throwing us curve balls with our health. For example, understanding how health insurance can help with mental health issues is important to many young Australians.
Again, this doesn’t necessarily mean you’ll benefit from having private health insurance, but it might be something to keep track of because nobody wants to miss out on critical services when they need them. Advice from friends and families is often a great place to start, even for day-to-day things like how often you can claim extras on dental, optical and physio.
Understanding how waiting periods work is also an important factor when deciding to take out health insurance
Waiting periods are designed to prevent people from claiming shortly after joining a health insurer and then cancelling their policy once they’ve received treatment. This “hit-and-run” behaviour would drive up health premiums overall and negatively affect members.
Different health funds often have different waiting periods or conditions for these services. For a start, it can be helpful to know what’s classified as a “pre-existing condition”:
A pre-existing condition is defined by law as any ailment, illness, or condition that you had signs or symptoms of during the 6 months before you joined a hospital table or upgraded to a higher hospital table. Your health fund will need time to advise you if your condition is pre-existing so be sure to check with your fund well before you go to hospital to make sure you are covered. (source www.privatehealth.gov.au)
If you’re in the middle of switching health funds and you take out comparable cover the waiting periods you’ve already served will be waived.
This is known as “portability” and it’s a rule set down by the Australian Government in the Private Health Insurance Act 2007. The portability rule only applies to hospital cover, but health funds usually waive the extras cover waiting periods too.
Remember, when doing your research, think cover first, health insurer second
While there are over 30 health insurers to choose from in Australia, think first about what you need from your cover before you get caught up in the different funds’ brand pitches and gimmicky giveaways.
When making any decision about your own health you need to feel confident you’re investing wisely.
There are also two types of health funds you need to be aware of:
1. Not-for-profit or mutual funds are run to benefit their members, so premiums are invested back into increasing benefits and improving customer service.
2. For-profits insurers, like Medibank, BUPA and nib, answer to their investors and focus on their business goals of delivering the best customer service.
For Singles, Single Parents, Couples and Families, you can get a rundown on the true value of health insurance based on what’s important to you. And if it doesn’t suit your current needs, we’ll let you know!