In 2000 the Federal Government introduced lifetime health cover, which effectively
penalises those who do not take out private hospital cover until after the age
of 30. For every year you are over 30 (up to the age of 65) when you first take
out hospital cover, you will be charged a 2 per cent loading on the basic premium.
The loading remains for life. So if you are 40, you will be charged 20 per cent
more each year than a 40-year-old who took out their policy before they turned
30. But this doesn't mean it's prohibitive to take out private hospital cover
at a later date. It is possible that what you save in premiums now may more
than compensate for higher premiums later on.
The Federal Government has introduced a 30% rebate on private health insurance
to help you and your family meet the cost of private health cover. The rebate
means if you pay a $1000 premium on private health insurance, you will receive
$300 back from the Federal Government.
You can claim your rebate by one of three ways:
If you earn more than $50,000 as a single person or more than $100,000
as a couple and do not take out private hospital cover, you will be charged
a 1 per cent levy on your income on top of the 1.5 per cent Medicare levy
you already pay. If you have children, the income threshold increases by
$1500 for each dependent child after the first.
The Federal Government introduced the levy in 1997 to stem a decline in
private health membership.
Early to bed and early to rise may make you healthy, wealthy and wise, but
will private health insurance deliver the same results? Certainly it will give
you speedy access to elective surgery in the comfort of a private hospital without
having to wait months or even years. And it will give you your choice of doctor
– providing they’re not on holiday when you want them. But private health
insurance comes at a cost, even after federal incentives of a 30 per cent rebate
on your premiums.
Medicare is the Federal Government's health care system that covers medical,
hospital and pharmaceuticals. If you use Medicare as a public patient, you
will be treated, at no charge, in a public hospital by a doctor appointed
by the hospital.
Greater choice of doctor than you would get in the public system.
Access to a private hospital which might be more luxurious than a public
hospital.
Possibly a shorter wait for some forms of elective (non-urgent) surgery.
Private health insurance means you have a right to choose your own doctor.
In the case of specialist procedures, your GP has a range of specialists he
or she can allow you to choose between. If you are admitted to a hospital
for emergency surgery, however, there may be insufficient time to call the
doctor of your choice.
While in effect this is a choice open to private health patients, if you
are seeing a particular specialist, your choice of hospital will come down
to where the doctor operates. This however may mean you have a choice between
two or three hospitals.
If you are to undergo elective rather than emergency surgery and are planning
to go through the public hospital system, you may have to wait months or even
years. Private health insurance generally means you can have the elective
surgery within weeks. And you may be able to have the surgery at a time and
place convenient to you.
Other ancillary services.
Note that with private ancillary/extras cover, part of the cost of the above
procedures are paid as benefits and annual limits generally apply.
Alternative to health insurance
An alternative to taking out insurance is HealthAssist, which allows you
to borrow the money should you need it rather than pay insurance premiums,
with similar rates to that of a personal loan. Here you may qualify for a
20 per cent government rebate if your medical treatment is more than $1,250
in one year.
To find out more about whether private health insurance is for you, the
Australian Consumers' Association website
offers health insurance calculators to help you assess various policies. Search
on "health insurance" for a range of articles on the pros and cons of cover.
Learn
more: Counting the cost of health, The
Age, 08 Apr 2002 Denise Cullen looks at the pros of private and public
health cover.
What you'll learn in this step: There are dozens of registered health
funds in Australia. The policy checklist and list of questions to ask your
insurer can make your choice simpler.
Private health cover comes in all shapes in sizes. There are more than 40
registered health funds in Australia offering some 5,000 different health
insurance products. Knowing which one is right for you is no easy task. It
is difficult to compare policies as each fund has different inclusions and
exclusions. As a result a number of organisations have sprung up to help you
choose.
These include Health Insurance Consultants
and Health Insurance Advisers.
In addition the Private Health Insurance
Administration Council (PHIAC) has a list of questions you should ask
potential insurers so you can make the best choice. The Australian
Medical Association also has a questionnaire to help you choose a fund.
For
a list of things to consider when choosing health cover see our health
insurance checklist.
What you'll learn in this step: The definition of a child varies between
funds. It pays to check that the policy you choose really covers what you
want it to.
Membership categories
There are four basic categories:
Single
Family
Couple
Single-parent family
The definition of a dependent child varies between funds. With some you can
be aged up to 22 and independently working, with others you might only qualify
up to 18 unless you are a full-time student and then you can be aged 25 or
even 26.
If
you are a couple without children and choose a policy with an excess, some
companies let you to take out two single policies. The premiums work out the
same, but you will only pay a single excess, not a couple's excess, if you
make a claim – and the single excess is lower. Of course if you both
need treatment, you will each pay the single excess.
Learn
more: Ways to save on your health insurance
Different covers
You can opt to have different levels of cover including:
100 per cent hospital (accommodation and food) and medical (surgical procedures)
costs.
100 per cent hospital but only partial medical cover.
Exclusionary cover, e.g. no obstetrics or no hip replacement cover.
Co-payments where you pay a specified or unspecified amount for each hospital
stay.
Ancillary cover – available separately or as an extra.
Each of these covers can have an excess component, much like car insurance
where you pay the first $100 or $1,000 and your premium is reduced accordingly.
Most
funds offer hospital cover without an excess, although the premium is higher.
100% cover on both hospital and medical
This means you will receive 75 per cent of the government schedule fee for
a medical and hospital service from Medicare, and your private health insurer
picks up the 25 per cent balance. But you will not be covered for pharmaceuticals
generally provided through the PBS. If your doctor charges above the schedule
fee and has no agreement with the health fund, you might find yourself up
for the difference. (See Watch the gap! below.)
Full hospital/partial medical
You will receive 75 per cent payment on the government schedule fee and your
private insurance will pick up the balance on any hospital treatment, but
you will only be covered to a certain percentage for your medical treatment.
Pharmaceuticals needed for your treatment are not covered. You will have to
pay for any doctors' charges that exceed the Medicare Benefits Scheduled Fee.
Check
whether you pay the excess once each year or for each hospital visit.
Exclusionary cover
If you are past your childbearing years, what's the point of paying for obstetrics
cover? Or if you are 25, do you really need to cover yourself against a hip
replacement? Some policies allow you to exclude items you may not need. But
be careful not to exclude yourself from treatment you may well need, as most
exclusion products link exclusions (See Susie's story
below.)
Specific cover
Gay and Lesbian Insurance Brokers (GALIB),
through Grand United Health Fund, offer a product that excludes obstetrics
but has increased benefits for alternative therapies, gym membership and healthy
lifestyle courses. The premiums are competitive at $80 a month for the top-of-the-range
product. You can take out single, couple or family cover. The policy is not
restricted to members of the gay and lesbian community.
Check
just how far the exclusion goes. You may find yourself faced without cover
for something you hadn't considered.
Case study - Susie's tale
Ambulance officers were called out to Susie, 42. Diagnosing acute food
poisoning, they took her to hospital. On arrival her condition worsened
and a cardiac cause was determined. She was then transferred under heavy
sedation to the cardiac catheter laboratory and underwent angioplasty
and stenting. Unfortunately, Susie's policy excluded cardiac intervention.
Even though she was not originally diagnosed with a heart condition
and even though she was not in a fit state to discuss the cardiac treatment,
her claim for $7,685 was rejected.
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Watch the gap!
Even with top hospital cover you can still find yourself paying the difference
between what your specialist charges and the rebate from Medicare and your
private health insurer. Medicare pays 75 per cent of the Government Schedule
Fee, while private insurance picks up the remaining 25 per cent. But if your
specialist charges above the schedule fee, you might find yourself out of
pocket. This is called the gap. Many funds have gap schemes that alleviate
this. Check with your hospital, specialist and/or anaesthetist whether you
will have to make a gap payment. These can change from year to year, so it's
worth checking regularly.
For
a full list of products in the gap cover scheme approved by the Minister for
Health and Aged, go to the Private Health
Insurance Administration Council's website.
For
further information on the gap go to the Department
of health and aged care website.
Co-payment cover
You can reduce your contribution costs by deciding on a co-payment product,
whereby you and the fund agree to share a portion of the risk. For example,
you might opt to pay $50 for each hospital visit.
Ancillary cover
Ancillary cover can range from physiotherapy and dental and optical benefits,
through to health club memberships. You can take ancillary cover with a different
insurer from your hospital cover insurer. Waiting periods often apply particularly
for major dental cover. Some health funds reward you for the amount of time
you are in the fund. For instance if you need braces, you will receive a larger
refund if you have been with the fund for five years rather than two.
Whether you take ancillary cover depends on your circumstance and expected
usage of the cover. For example, if you play a lot of sport and may need a
physio on a regular basis, it may be worth your while to take out the extra
cover. But there's no point taking out ancillary cover if you only have a
dental check-up twice a year, don't wear glasses and never visit a chiropractor.
What you pay on the odd occasion for these services is probably less than
the extra premiums.
Alternative therapies and general fitness
Increasingly, health funds are recognising the value of alternative therapies.
Alexander technique, iridology, aromatherapy, acupuncture and homeopathy may
all fall under your ancillary insurance cover. Funds can cover you in both
sickness and in health. Swimming lessons and quit smoking therapies are among
the things you might be able to claim. Or what about membership fees to your
local sporting club or help in paying for some of the equipment? MBF, for
example, has Lifestyle Bonus, which offers $200 a year towards fees, equipment
and even videotapes connected with such sports as snowboarding, abseiling,
cricket and scuba diving. Of course, you may find you are actually paying
higher premiums for these extras, so make sure you are comparing like with
like.
Check
your benefit limits. You might only get $200 maximum on your dental per year
per family, or per individual. Each health fund is different.
 |
What you'll learn in this step: Waiting periods may apply if switching
to a new fund. Read the list of 'golden rules' to help you with your policy.
Golden rules
Read the fine print.
Check out the waiting periods.
Check if excesses are annual, per hospital visit or not at all.
Contact your fund before going into hospital to check whether there will
be any gap to pay and whether your fund has an agreement with your preferred
hospital.
Regularly review your health insurance needs.
Switching funds
You are allowed to switch from one health fund to another. If you are switching
to a similar product and you have already served your waiting time with your
original fund, you may be able to claim for treatments straight away. Otherwise,
additional waiting periods may apply. To switch funds, simply apply to the
new fund and ask your existing fund for a clearance certificate. This certificate
sets out your claims history. Since the introduction of Lifetime Health Cover,
there has been a jump in complaints in two key areas – waiting periods
and the definition of pre-existing ailments, according to the private health
insurance ombudsman.
If
you switch funds make sure you cancel your direct debit payment to your old
provider.
Waiting periods
Generally, by switching products or funds you won't be left in a less beneficial
position than a new member joining that fund. But if you are joining for the
first time or upgrading your policy, waiting periods typically apply:
12 months for a pre-existing condition.
12 months for obstetrics.
Two months for general hospital.
These waiting periods are designed to stop you joining the fund merely to
treat a pre-existing condition or perhaps for childbirth and then promptly
leaving the fund on completion of the treatment.
Pre-existing conditions
If you have a pre-existing condition, you will have to wait 12 months before
you can claim for any treatment. Be careful that you don't get caught here.
A pre-existing condition does not have to be diagnosed in the six months before
joining a fund; there merely need to be signs or symptoms which a medical
practitioner appointed by the fund attributes to your current condition.
Ambulance cover?
Hospital policies in NSW and the ACT include ambulance cover. Other states
include it under ancillary cover, but check with your insurer and your state
to determine if you are covered.
Claims
You need to be prompt with your claim. Most funds will not pay out if you
do not claim within two years of the treatment. If you can claim from other
sources, such as through workers compensation, travel insurance or sports
insurance, your health fund will not pick up the tab. Claims can usually be
made through the offices of your insurer or at your local Medicare office
which has a reciprocal arrangement with most private health funds. Just fill
in your form, and the rebate will be deposited in your bank account or mailed
to you, usually in a few weeks.
Overseas travel
If you're going overseas for more than one month but less than two years,
some funds will allow you to suspend your membership for that period. However,
you may have to confront an additional waiting period on re-entry. Australia
has reciprocal arrangements with the UK, New Zealand, Italy, Malta, Ireland,
Finland, the Netherlands and Sweden.
Complaints
So you have a complaint... who are you gonna call? First, go to your health
fund and register your complaint. They tend to have methods to deal with complaints.
If this fails, you can contact the Health
Insurance Ombudsman or phone 1800 640 695 (or 9261 5855 in Sydney).
Step 1:
Step 2:
Each week financial advisor Noel Whittaker answers your
questions.
