Will Private Health Insurance Cover Everything?

When you do a simple health insurance comparison between public (Medicare) and private health insurance, it’s easy to see how the latter can supplement the former in terms of coverage. Private health insurance encompasses the benefits provided by the Medicare system, but can offer more as well. Of course, there’s no such thing as an insurance that “covers everything”.

As you may know, any type of policy will always have its exclusions and restrictions. Nevertheless the types of coverage available in private health insurance are wide enough to include what you would reasonably expect.

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Common coverage

These are the four areas of coverage that private health insurance can provide. Private health funds may offer them as separate policies, or combine them into packaged products that include all four. You’ll find that hospital and general treatment policies come in different levels of coverage. Top or comprehensive levels have the least number of exclusions and restrictions, while basic policies have all the common exclusions. Naturally, higher benefits and wider cover tend to result in higher premiums. Keep this in mind when you compare health insurance from the various companies and accredited health funds.

Hospital cover – A top level policy in this area would normally include all services that Medicare also covers. 75% of the costs of services listed in the Medicare Benefits Schedule (MBS) will be covered by the public health insurance system. The remaining 25%, which may include doctors’ professional fees or hospital accommodation, can be covered by your private health policy. You also have the choice to be treated as a private patient regardless of whether you’re in a private or public hospital. Unlike in Medicare, you can also choose your own doctor.

General treatment – There are certain treatments that are outside of Medicare’s scope or limited in benefit. Examples of such are dental, psychiatric, and optical treatments. It is in this area that private health insurance may be advantageous as this would be the only option to get coverage for such treatments. Other services for which you can get coverage through this type of policy are physiotherapy, chiropractic services, podiatric treatment, and prosthetics. General treatment cover is also sometimes called extras or ancillary cover.

Pharmaceuticals – Whether you have private health insurance or not, you only have to pay for the partial cost of certain prescription medicines listed in the Pharmaceuticals Benefits Scheme (PBS). The discount you receive depends on the type of medicine you purchase. Not all types of pharmaceuticals however are listed on the PBS. Thus you may arrange coverage for such medicine with your health fund and have it included in your policy. Usually a co-payment feature is used where pharmaceuticals are concerned.

Ambulance cover – This is another area which isn’t covered in Medicare. State governments such as those of Tasmania and Queensland have free ambulance services. The same is available in New South Wales and Australian Capital Territory but applies only to pensioners and those with low income. Generally, however, emergency and ambulance services are something that has to be either paid out of pocket or included in a private health insurance policy.

Broader health cover

Treatment doesn’t always have to be done in a hospital. Some services are available in healthcare clinics, while others can be done in the patient’s home. Then there are chronic conditions that need to be constantly treated and managed. These areas are not usually found in common private health coverage.

Fortunately, in April 2007, health funds began to devise health insurance products that would address such situations. Hospital substitute treatments are those done or continued outside of a hospital, and may include intravenous therapy or wound care, for example. Chronic disease management programs such as those for diabetes or cardiac conditions may also be covered by such policies. How these new coverage features are made available for contributing members is at the private health fund’s discretion.

5 Simple Things that May Lower Your Health Insurance Costs

The federal government manages the country’s health insurance system, but you still have to accept that there will tend to be annual rate increases. Making a private health insurance comparison is a good approach to see if you can find a cost-effective policy that suits your needs. To make a fair comparison, however, you need to be familiar with certain aspects that have a direct effect on premiums and other costs. Presented here are five things that may lower your health insurance costs:

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1. Excess and co-payment

These two are common mechanisms that may help you to lower your private health insurance premiums. An excess is a particular amount you agree to pay out of your own pocket for hospital expenses before the actual insurance benefit kicks in. This is why this is also sometimes called a front-end deductible. A co-payment is similar in that it is also an amount you agree to pay on your own. But this is usually a partial cost of a particular hospital service, like accommodation for example. Excesses and co-pays feature in hospital insurance policies and the usual pattern is that premiums become lower as excess or co-payment amounts become higher.

2. Method of payment and rate protection

As you compare private health insurance products from various service providers, you might come across some lower prices offered based on how you pay your premium. Some insurers for example may offer lower premiums if you decide to pay through a salary deduction scheme, an automatic debit from a bank account, or even just a simple advance payment of several months’ premium.

If you can manage it, paying for a whole year in advance may make you eligible for health insurance rate protection. If health insurance rates increase within a year, those who still aren’t fully paid may be burdened with the resulting balance or have their coverage periods reduced. With rate protection you don’t have to worry about such events, at least within the year of coverage you’ve already paid for in advance.

3. Private Health Insurance Rebate

Even as you compare health cover from various health funds, the federal government has already instituted a way for you to reclaim part of your insurance costs. Started in January 1999, the Private Health Insurance Rebate means that you can get back 30 cents of every dollar you spend on private health insurance. 30% is the set percentage for those under 65 years of age. Those who are 65 to 69 years old can get back 35%, and those who are 70 and above are entitled to 40%. There are several ways you can receive this rebate. You can claim direct payment from a Medicare office, request your insurer to subtract it from your premium, or get it when you accomplish your tax return.

4. Lifetime Health Cover

This is another relevant federal regulation, that prompts rather than rewards. According to the Lifetime Health Cover rule, you will have to pay an additional 2% on your premium for every year that you didn’t have hospital cover above the age of 30. So someone who just got private health insurance at 34, for example, is going to pay 8% more than someone who bought the same type of policy at age 30. The message here is clear – get hospital cover early if you want to reduce health insurance costs in the long run. Take note that the date it kicks in is the 1^st of July after you turn 31.

5. Exclusions and restrictions

These refer to particular treatments or conditions that are either completely outside your policy’s coverage (excluded) or can only receive limited benefits (restricted). Policies may come with default exclusions and/or restrictions, but it’s also possible to actually negotiate or agree to such provisions in order to reduce your premium. Take note that this can be a risky approach compared to simply opting for more excess or co-payments, as you’ll actually be removing coverage and not just simply reducing the payable benefits.

Private Health Insurance Comparison for Beginners

Through policies like the Private Health Insurance Rebate and Lifetime Health Cover, the Australian government has made private health insurance both an advantageous and appealing option. Doing a comparison of the various products offered by private health funds is the typical way to find a suitable policy for your needs. There are of course a couple of basic terms and concepts that you may need to understand while making your health insurance comparison.

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Hospital and general treatment

The first thing to understand when you compare private health insurance is that there are two essential types of policies: hospital and general treatment. The first provides coverage for hospital treatment, and is comparable to what Medicare offers in terms of the treatments that are covered. General treatment cover is also known as extras or ancillary coverage, because it provides for other kinds of treatment that are not usually covered by Medicare or hospital insurance. These could be dental or podiatric surgery, for example. A common practice of insurers is to combine both coverage types into a single medical insurance policy. You may also choose to get separate policies for each type of cover from different providers, if you find that this could help to optimize your private health insurance.

Exclusions and restrictions

In any health insurance comparison, you should also carefully note what are the exclusions or restrictions. Most types of policies will have provisions that list which treatments or conditions are covered and which are not. Different ancillary and hospital insurance policies give varying levels of coverage and as you go lower, more exclusions and restrictions are added.

A top-level private hospital insurance, for example, may cover all services that receive Medicare benefits, while a basic level of private health cover may exclude cardiac-related and psychiatric treatment, for example. Exclusion means the specified treatment or condition is completely beyond the policy’s coverage, while in a restriction, the treatment may be included but only after a set of requirements are met.

Waiting periods

One kind of restriction you’ll often see as you compare health insurance is the waiting period. This can be applied to specific treatments or established as a general requirement of a policy. In the former case, this can be known as a benefits limitation period.

The main purpose of a waiting period is that it prevents new members from immediately making large claims and then dropping their contributions, as that would eventually make it necessary to increase all premiums across the board. Government regulations set the waiting periods for hospital cover. Obstetric treatment, for example, gets a maximum of 12 months, while psychiatric care has a two-month waiting period. For general treatment policies however, private health funds are free to set the length of time.

Pre-existing conditions

Symptoms of any illness you may have in the 6 months or more prior to becoming insured may be considered a pre-existing condition. The doctor assigned by the insurer, and not your own doctor, has the right to determine this. A pre-existing condition usually results in a waiting period and the insurer cannot set a length of time longer than 12 months for a hospital cover policy. Take note that this applies for both new membership and for policy upgrades.

Community rating

This is a system set in place by the Private Health Insurance Act of 2007. This piece of legislation basically rules that insurers can not charge premiums based on one’s state of health or insurance claims history. Health insurances in other countries that base rates on these factors are commonly called risk-rated. With community rating, Australians have access to health insurance no matter what their medical status may be, and pay the same price for the same policy. What’s more likely to affect your insurance costs is the level of coverage you purchase and, with the Lifetime Health Cover, any time you spend without private hospital cover after the age of 30.