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3 big changes in the 2018/19 health insurance reforms

8 min read
1 Nov 2018

N.B. The information presented on this page is based on the Private Health Insurance (Reforms) Amendment Rules 2018.

In an effort to make private health insurance more affordable and simple to understand for Australians, a range of reforms were announced in October 2017,  some of which are planned to come into effect from 1 April 2019.

We’ve summarised the three biggest proposed changes to make it easier for every Aussie to understand how the changes may affect them. For live updates and more detail on these changes as they happen, check out our 2019 Health Insurance Reforms live news page.

These changes will include:

  1. Discounts for younger Aussies
  2. New categories to help you understand what’s covered
  3. Fewer options for natural therapy benefits

A closer look at health insurance discounts for young Australians

Looking at survey results from Ipsos Morae (a leading market research organisation) from 2017, young singles 15-29 years of age were the least likely age segment to have private health insurance.1

Soon, on top of their health needs, younger Aussies will have another reason to start thinking about taking out health insurance before they get any older.

From 1 April 2019, Australians who purchase health insurance for the first time between the age of 18 and 29 may be able to take advantage of age-based discounts. This could include a two per cent discount on hospital cover for each year you’re under 30, with a maximum of 10 per cent for 18 to 25-year-olds. For example, if you purchase your policy at 28 years of age, you may receive a four per cent discount on your hospital cover if your insurer offers a discount on the specific policy you are taking out.

Once you have purchased a policy, you will retain your discount until you turn 41 (unless your health fund discontinues age-based discounts on your policy or you switch to a different product which is not an age-based discount policy). After turning 41, your discount will decrease by two per cent every year for up to five years until the balance is nil, or until you turn 45 when you are no longer eligible for any discounts.

Your ageYour percentage discount on premium
18-2510%
268%
276%
284%
292%
Your base percentage discount will start to reduce after you turn 41

Age-based discounts are up to the insurer’s discretion and are not mandatory for any product, but if a discount is offered on a specific product, it must be made available for all policyholders who have the same product. If you do switch policies, your new health fund can choose whether to honour your previous age-based discount or not. However, when transferring between policies or funds you will be able to confirm – before you transfer – whether your existing discount will continue to apply to the new product.

The new tier system explained

Here at Compare the Market, we understand that health insurance can be difficult to understand or shop for. In fact, a survey conducted by Pure Profile showed that health insurance jargon left up to 85% of surveyed Aussies stumped.2

To make it easier for you to understand exactly what you’re covered for in terms of hospital treatment, new hospital product tiers will be introduced to health insurance policies from 1 April 2019: Gold, Silver, Bronze and Basic.

Your hospital cover must include the specific hospital tier that the product falls into in the name of the product (e.g. gold hospital) so you can easily determine your level of cover.

Each tier will have a minimum list of clinical categories that must be included in the product for it to be classified as either Gold, Silver, Bronze or Basic.

Understanding Gold, Silver, Bronze and Basic policies

  • Gold tier policies must include unrestricted* cover for hospital treatment found in all the clinical categories in the product tiers table: it will be the ultimate hospital cover.
  • Silver tier policies must have unrestricted* cover for a broad range of services as outlined in the product tiers table (however, not as many as Gold), and must provide either unrestricted* or restricted^ cover for rehabilitation, hospital psychiatric services and palliative care. All other benefits the fund chooses to include on top of the minimum required categories must be unrestricted*.
  • Bronze tier policies must still have unrestricted* cover for a fair range of hospital treatments as outlined in the product tiers table (again, not as many as a silver policy), as well as providing either unrestricted* or restricted^ cover for rehabilitation, hospital psychiatric services and palliative care. All other benefits the fund chooses to include on top of the minimum required categories must be unrestricted*.
  • Basic tier policies will have a minimum requirement of restricted^ cover for hospital rehabilitation, hospital psychiatric services and palliative care, and funds can choose to include additional services on top of the minimum categories either at a restricted^ or unrestricted* level.

Your health fund will also be permitted to include additional cover above the minimum requirements for other hospital treatments – if they choose to do so. These policies must include “plus” or a “+” in the policy name to clearly identify that they include more than your standard level of cover.

For example, policies in the lowest tier must have “Basic” in the policy name, but if the health fund offers additional cover (above the minimum requirement) on the “Basic” policy, the policy will have “Basic Plus” or “Basic +” in the name.

If health funds do choose to cover more categories than the minimum requirements for Silver or Bronze products, it must be unrestricted* cover, whereas additional cover for Basic policies may be offered on a restricted^ or unrestricted* basis, and Gold policies will obviously include unrestricted* cover for all clinical categories.

Not only will this change make it less confusing for you to understand what’s covered under your hospital policy, having policies under tiers like this will also make it much easier for you to compare coverage and prices of products between different health funds.

Older-Woman-And-Young-Girl-Walking-On-Path-In-Sunlight

The Gold, Silver, Bronze and Basic tiers won’t be applicable to extras cover (also known as general treatment or ancillaries). Also, to make the change less confusing, extras-only policies will no longer be able to include the name of any metal, gemstone, or semi-precious stone in the product name.

So, the question is, which cover will suit you? Find out more about exactly which benefits will be included in the new hospital product tiers.

Natural therapies struck down

Woman-Doing-Yoga-On-Blanket-By-The-Ocean

From 1 April 2019, you will no longer be able to receive benefits through your ‘extras’ policy for 16 types of natural therapies or treatment, including:

Alexander techniqueFeldenkraisKinesiologyRolfing
AromatherapyHerbalism + western herbalismNaturopathyShiatsu
Bowen therapyHomeopathyPilatesTai Chi
ButeykoIridologyReflexologyYoga

So, why was coverage for these natural therapies removed?

The decision was based on research by the National Health and Medical Research Council (NHMRC) which revealed that there was “low to medium” evidence that these therapies improved health conditions, or not enough evidence to even draw any conclusions3.

Despite a lack of evidence found by the NHMRC, there’s no second-guessing these therapies’ popularity among Australians; natural therapies has been one of the fastest growing type of treatment covered by extras.

According to a Health Insurance report by the Australian Prudential Regulation Authority (APRA)4, natural therapies ranked as the fifth highest number of services and amount of benefits claimed on health insurance during 2017:

General treatmentNumber of services providedAmount of benefits paid
Dental40,944,157$2,659,431,709
Physio11,678,794$418,688,913
Optical11,600,248$873,704,207
Chiropractic9,351,302$289,406,021
Natural Therapies6,376,252$196,965,976

This means that many Aussies may be affected by the removal of the aforementioned therapies from health insurance policies.

While health funds will no longer cover these benefits under their policies, they may still introduce incentives for some of these services (e.g. potentially something like naturopathy coupons) if they choose to. However, this is only as long as these incentives comply with the requirements of the Private Health Insurance Rules.

Searching for an affordable alternative?

While it may not be the same quality as actually going to a class, there are countless yoga apps and videos online if money really is an issue. Otherwise, your local council or state government may provide active park events and recreation programs which include free or low-cost activities like Pilates, tai chi and more!

Sources

  1. Health Care and Insurance Australia 2017, Report 11: Population Status, survey conducted by Ipsos Morae on behalf of comparethemarket.com.au.
  2. Pure Profile survey of 1,500 consumers (2016)
  3. Private Health Insurance Rules: Reform Amendments 2018 – Guide To The Exposure Draft July 2018
  4. Private Health Insurance Statistical Trends March 2018 – Benefit

Glossary of terms

^ Restricted cover – refers to being covered as a private patient in a public hospital. However, if you go into hospital as a private patient in a private hospital, your health fund will not pay any benefits towards the theatre fees and only a small benefit towards your accommodation fee. This means you will face considerable out-of-pocket costs.

* Unrestricted cover – refers to being covered for your theatre and accommodation fees as a private patient in a private hospital or a private day hospital facility, as well as being covered up to the Medicare Schedule of Fees (MBS) for clinical categories included as unrestricted on your policy. Having this level of cover allows you to choose the doctor who treats you, provided your doctor has an arrangement with the hospital you want to be treated at, and the hospital you have chosen has beds available.

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Written by Michael Tabet

Michael’s all about creativity and thinking outside the box (what box?). He uses his Communications degree to best share his ideas, stories and witty anecdotes. He is Compare the Market's resident TV buff and Harry Potter obsessive (great for trivia); ready to take on the world one word - and coffee - at a time!

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