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.
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.
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.
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.
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.