Choosing private health insurance can feel like a complicated process. Indeed, it may seem challenging to know which products will provide the greatest benefits.
But it doesn’t have to be!
With some research and planning, you’ll usually be able to select cover that works for you. We’d like to help, so we’ve listed some essential hacks and tips to assist you in getting the most out of your health insurance:
1. Find coverage for services you’ll actually use
There’s no one-size-fits-all product when it comes to private health insurance, so it’s essential to find a policy that offers services you think you’ll use. The four-tiered health insurance categories system makes it easy to know which treatments and services are offered by each private hospital insurance policy, as well as what may be excluded.
You may find that services you believe you’ll rely on are included in Bronze or Basic levels of cover, which could be significantly cheaper than higher-tiered products. Gold and Silver products are the more comprehensive options and may be something you select if you want peace of mind. If you want something in between the tiers, you can look for ‘plus’ policies like Silver Plus or Bronze Plus that can be a cheaper alternative while still providing decent cover.
When it comes to extras (for out of hospital medical treatments), you should take the time to assess your cover properly. While extras can be beneficial if you use them (e.g. dental check-ups, physiotherapy appointments), you could be wasting cash if you’re covered for services you have no use for (e.g. podiatry, in the event you have no issues with your feet).
You also have the option of a combined policy, which includes both hospital and extras cover.
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2. Learn about waiting periods
If you’re taking out private health insurance for the first time or upgrading from a lower level of cover to something more comprehensive, you’ll be subject to waiting periods. This is to stop people from claiming on their policies immediately after signing up, and then cancelling before they pay any premiums (which would drive up premiums for everyone).
Both extras and hospital policies are subject to waiting periods, so consider this when choosing a health insurance product. These are:
- 2 and 36 months for most extras services
- 12 months for any pre-existing condition
- 12 months for pregnancy and birth-related services
- 2 months for palliative care, rehabilitation and psychiatric care.
In some instances, you can avoid the two and six month waiting periods on extras by signing up to a health insurer offering to waive them. March (the last month before premiums increase on 1 April) and June (before tax-time) are commonly peak periods for these types of offers to hit the market, so look around to see which health insurers are offering to waive their usual waiting periods for new customers.
3. Your limits reset every 12 months
You’ll need to be aware of any annual limits your policy may be subject to. This is because you can only claim up to a certain amount for each service, which resets every 12 months.
Try to use your cover as much as you can (if you need to) before the year is out. For example, if it’s December and you haven’t had a dental check-up yet, why not book one in if you’re covered for it? Otherwise, that annual limit is essentially going to waste.
It’s also worthwhile double-checking to make sure you’re aware of what the fund deems to be the start of a new year. The definition of annual varies with many funds limits refreshing on 1 January, whilst others are 1 July.
4. Seek out discounts and rebates
Taking out health insurance can ease the burden on the public healthcare system, if you’re being treated in a private hospital. Because of this, there are several incentives to entice you to sign up for private cover.
- Private health insurance rebates.Many Australians who take out a hospital, extras or combined policy are entitled to a rebate from the government to help pay for premiums. The rebate is income tested and can either be deducted from your premium or as a tax offset when filing your tax return.
- Aged-based discounts. Australians aged between 18 and 29 can receive discounts on hospital policy premiums for merely taking out cover while they’re younger.
Check to see what you’re eligible for.
Also keep an eye out for sign-up offers. When you have found a policy that is ticking all the boxes, having a sign-up offer included could be the icing on the cake. These limited-time bonuses can often include weeks free off your premiums or gift cards.
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5. Learn how private health insurance can impact tax and other penalties
Conversely, there are also levies imposed on some who don’t have appropriate levels of cover.
- Medicare levy surcharge (MLS). High-income earners are subject to paying a surcharge of up to 5% (depending on the income threshold they are in) on top of their income tax if they don’t hold valid hospital cover. This is separate from the Medicare levy, which most taxpayers pay, regardless of whether they have insurance or not.
- Lifetime health cover loading. People who don’t take out private hospital insurance before 1 July after their 31st birthday will pay more for cover when they do take it out. Whilst not considered a tax, this loading is 2% for each year you didn’t hold cover from the 1st July following your 31st birthday (up to a maximum of 70%) (e.g. 35-year-olds who take out private hospital insurance for the first time would pay a 10% loading).
6. Think about what life stage you’re at when choosing health insurance
Where you are in life will determine which kind of health insurance may be the most appropriate for your needs.
Here are some questions you may ask which could help you determine which policy you choose.
- Do you have any pre-existing conditions that may require treatment in the near future?
- Are there any hereditary health conditions in your family that could impact you?
- Are you planning on starting a family and will you require access to obstetrics cover? Remember, this cover is subject to the 12-month wait.
- Do you also need to take out health insurance to cover your partner or children?
- What kinds of out-of-hospital services do you regularly use that may be covered by an extras policy?
- How will your health needs change as you age and which services will you need access to?
- Are you still living at home? If so, you could be covered under your parents’ policy for longer than you think. How long you can stay on for does vary from fund to fund so do your research.
Private health insurance is all giving yourself more options for treatment when you need them. As such, you’ll have to ask yourself these questions again in the future to make sure your cover still makes sense.
7. Adjust your private health to make it more affordable
You can usually tweak aspects of your private health insurance to make your insurance premium more affordable. Consider the following:
- Customise your excess. If you choose a higher excess (i.e. what you agree to pay if you make a claim and are treated in hospital), it’ll usually reduce your premiums. Because your excess is a fixed amount, it won’t change – whether you require treatment for one day or one month.
- Choose a co-payment. A co-payment is what you agree to pay for every day you’re admitted as a patient in a hospital. If your co-payment is less than what the excess would be and you know how long you’ll be staying at the hospital, it could be the more affordable option.
- Consider if you need hospital and extras cover. If you only need one or the other, you could save a lot of money by picking a hospital-only or extras-only policy instead of a combined one.
- Can you pay upfront? Some insurers offer percentage discounts for customers who pay their premiums annually instead of week to week. This can also help you avoid the usual April premium increase.
You can also earn some slight discounts by paying your premiums via direct debit instead of with paper, just in case you were still doing that!
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8. Are you covered if you need an ambulance?
Did you know that ambulances aren’t free in all Australian states and territories? While the Queensland and Tasmanian state governments cover residents in these states, Australians elsewhere will require this specific cover to avoid footing the whole bill. You can take out ambulance cover either as a policy or through membership with your state or territory’s ambulance service.
This means you could be left with some hefty out-of-pocket expenses if you require an ambulance but don’t have ambulance cover. This is another thing to think about when choosing health insurance.
Keep in mind though that ambulance cover may have to be taken out separately to private health cover.
Our final hack: Reassess your health insurance regularly
Whether it’s an industry-wide premium rate rise or your insurer wants to charge you even more for a policy, it’s always a good idea to reassess your cover. In addition to making sure your existing policy still covers services you may require, it’s an opportunity to assess whether you could pay less for the same product elsewhere.
This can be achieved through research or using useful tools like our health insurance comparison tool. It allows you to compare policies, extras, benefits and costs from a variety of providers in one convenient location. It’s simple, free to use and takes just minutes to reach a result.