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.

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.

Community Rating – What It Means and What To Do If You’re Refused Insurance

In some countries, if you are older or have health issues, finding health insurance can be difficult, if not impossible. If you do find coverage, it will cost you much more than it would cost a younger, healthier person. In Australia’s private health insurance system, a single, healthy, 23-year-old man and a single, unhealthy, 59-year-old man will pay the same premium for the same coverage. This is because of community rating.

What is Community Rating?

Community rating means that all Australians have affordable access to private health insurance. Everyone pays the same baseline premium for their health insurance and health funds are not allowed to discriminate against members based on age, health status or claims history.

Community rating is very different from the usual method of determining premium payments, which is risk rating. In risk rating, the insurer bases the premium on various risk factors associated with that client. In community rating, the premium is based on risk factors applying to the community as a whole.

The goal of community rating, as set out in the Private Health Insurance Act of 2007, is to ensure that everyone who wants it has access to health insurance and to prevent private health insurers from discriminating between people on the basis of their health or any other reason.

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How Does It All Work?

In Australia, all private health insurers are regulated by the Commonwealth Government under the Private Health Insurance Act of 2007. This means that, by law, all health funds must comply with community rating, meaning you cannot be denied access, refused cover or charged extra for private health insurance, except for a few exceptions. There are some rules about waiting periods, and there is the Lifetime Health Cover rule which is designed to encourage people to start hospital cover early and keep it going long-term.

You have the right to join any private health insurance fund you choose, and you may switch from one fund to another at any time without financial penalty.

What To Do If You Are Denied Health Insurance

Although the goal of community rating is to provide coverage for all at the same price, there are times when a person is denied private health insurance coverage.

One of the most common reasons for denial is if a person has pre-existing medical conditions and doesn’t have the money to pay for the exams and treatment that may be necessary. This may seem contradictory, but if you are denied coverage, you do have other options.

• Contact the Private Health Insurance Ombudsman – this organization is there to help consumers with health insurance questions and enquiries. You may be able to appeal against the decision to refuse health insurance cover or to deny a claim.
• Learn all you can about private health insurance in Australia to fully understand your rights and what you can expect.
• Compare private health insurance policies. Find out whether you have any other choices, compare plans and prices, and make an informed decision about what to do.

Community Rating is meant to help provide quality private health care cover for Australians, no matter what their age or state of health. If you are denied coverage, try not to be discouraged; check your options and don’t be afraid to ask for guidance from a professional.

Paying for Private Health Insurance

Just thinking about health insurance gives me a headache. I have to know what I need, how much I should pay for it and how to go about finding the coverage I want. Unless money is no object to you, then cost will be a consideration when you compare health insurance options. There’s a lot to learn and consider, but with some time and effort, you can get the coverage you want and feel confident you’re paying no more than necessary.

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Understand What You Already Have

The good news is that as an Australian, you already have basic health care coverage. Medicare is the basis of the Australian public health care system and covers many health care costs like basic medical care including doctor visits, tests, surgery and more, as well as hospitalization. However, there are limits and stipulations. Medicare does not cover private patient hospital costs, glasses and contacts, most dental services, and certain other health care related expenses. You can find out more about what is and isn’t covered by Medicare from the government’s Private Health Insurance Ombudsman.

Decide What You Need

Once you’ve figured out what you’ve got, then you can start deciding what health insurance coverage you want and how much you’re prepared to pay for it.  Your health insurance needs are based on a few factors. The number of people needing coverage, your age(s), general health and your personal preferences are some things to consider.

Age

Age is a consideration for a couple of reasons.  First of all, you may want more health insurance coverage as you get older, to cover the health conditions that age may unfortunately bring. You may also want health insurance coverage for your whole family, including children. Another consideration is the Lifetime Health Cover, a government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover.

Number of people needing coverage

Obviously, the number of people you have to cover will affect your health insurance comparison and quotes. If you are a family of four, you may decide you need to provide private coverage for only the adults in the family, only the children, or all four.

General health

Your overall health is also something to consider when deciding on private health insurance. If you are healthy and rarely need medical care, you may decide you don’t need any private coverage. But if you have a medical condition that requires even occasional medical treatment, you may need some additional coverage.

Personal preference

If you are fine with having to use the doctors and medical establishments covered by Medicare, you may not want private health insurance coverage. However, if you like being able to choose who you see and where you go, you may want to take out some private health insurance.

Decide What You Can Pay

Now that you understand what coverage you have through Medicare and have figured out what additional coverage you need, it’s time to examine your options, look at the costs and decide what you can and will pay. The prices vary as much as the policies, so this is where more research may become necessary.

Although this may seem intimidating at first, there are websites that can help you to compare private health insurance. If you enter some basic information you’ll be given a list of several health insurers that offer the coverage you detailed, along with either an estimate or a quote for the monthly premium. There are many things to consider when it comes to cost. The government offers a rebate for private health insurance which means you may get back some of the money you pay on your premium.

There are many private health insurance policies out there, but don’t feel overwhelmed. And always remember, you are not completely without health insurance coverage. Medicare is sufficient for basic health care needs. If you are having financial difficulties, you may decide you simply can’t afford private health insurance

The main goal in finding private health insurance on a budget is to get the coverage you want without paying more than you can afford. This can be achieved if you take your time and do your research. Once you’ve chosen your policy with the above tips in mind, you’ll have peace of mind about your health insurance coverage and your budget.

Should You Get Private Health Insurance?

The decision of whether or not to purchase private health insurance is an important one in Australia as in many other countries.  While private health insurance is not a necessity, there may be several benefits to private health cover, both on a practical and financial level.  Ultimately, the decision will come down to your preferences and budget.

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Medicare: Public Health Cover

Citizens of Australia and New Zealand (and residents holding permanent visas) are eligible for Medicare, a highly-regarded form of public health coverage.  There is no cost.

Covering a number of essential aspects of health care, there is a list of Medicare benefits that citizens can take advantage of – and it’s relatively simple in terms of the process.  The patient can pay their own healthcare fees and then claim a reimbursement, or arrange for the cost to be taken care of at the time of treatment or consultation.

Note that while there is no cost, there is the Medicare Levy Surcharge and Lifetime Health Cover, both of which you should ensure you understand.  Also, there are some disadvantages associated with the public health care system, as we will see in the next section.

Advantages of Private Health Insurance

Private health insurance or hospital cover will help to pay your healthcare costs in a number of important areas.  It also offers practical advantages that you should consider.

Private health insurance may be more convenient.  You are free to choose your own doctor, and can avoid the waiting lists associated with public health insurance.

There is also the important point your of peace of mind.  Private health insurance policies will certainly provide more extensive healthcare coverage.  You can choose where you are treated, feel more confident in being covered for a variety of treatments beyond those available through Medicare, and often get your consultation and/or treatment faster with private health insurance.

Financially, as we have seen, you may want to look into your eligibility for the Medicare Levy Surcharge and the Lifetime Health Cover. If you can make these systems work for you, then when you combine this with the Private Health Insurance Rebate – at least 30% – you can start to see the savings that can be grasped.

Can’t Afford Private Health Insurance?

Not everyone can afford to purchase extensive private health insurance coverage.  There are some options if that is your situation.

You might consider getting a low-coverage private health insurance policy that covers only a few services beyond those available through Medicare.  This way, you will be eligible to avoid the taxes mentioned above.  Alternatively or additionally, you could look into whether you might be eligible for a lower health insurance premium for any reason, or whether you might obtain a discount in any way.   The overall cost may turn out to be quite reasonable.

Overall, the answer to this question is once again dependent on your needs.  You might be able to take advantage of the benefits that come with comprehensive private health cover.  However, don’t fret if that isn’t the case – there are several options that can enable you to make the most of your situation.  Consider some of these with regard to your needs in order to make the right decision.