Changing health insurance policies or health funds is easier than you might think. If you’re looking for a better deal or your personal situation has changed, it could be worth considering.
Let’s look at some of the benefits and common misconceptions about switching health insurance and how it works.
There are many great reasons to switch health insurance. The number one reason is to save money or get better value out of your cover. But also, as you grow older and your circumstances change, so do your healthcare needs, and you might end up paying for health insurance cover that you no longer use or missing out on benefits not provided by the policy held with your current health fund.
Changes of circumstance – such as planning to have kids, consolidating your bills with your partner or a change in your financial situation – could also be another reason to make the switch.
There are also several other reasons switching health insurance providers can benefit you.
If you’ve completed your waiting periods, you won’t have to re-serve them again if you switch to the same or lower level of cover, which can even be the case for pre-existing conditions.
However, if you’re upgrading your existing hospital or extras cover, you’ll be required to serve waiting periods for the additional services you gain from your new policy. For example, you’ll need to serve waiting periods if:
If you’re switching health funds, you will need to provide the clearance certificate from your previous fund to establish your previous level of cover and the waiting periods you have served. Your new health fund should take care of this process for you, provided you’ve given them your previous fund details.
Do you want treatment from a particular healthcare provider that doesn’t partner with your current health fund? You may be able to find a new fund with an agreement with that provider, resulting in lower out-of-pocket costs (provided you’ve served any applicable waiting periods).
Depending on your policy and health insurance provider, you may be able to find a new extras policy that has more generous rebates or limits for particular treatments (e.g. physiotherapy or major dental).
When switching to a policy with higher limits, you’ll be required to serve any relevant waiting periods prior to accessing the additional benefit. For example, if you’ve served the waiting period on your current policy with a $500 annual limit for general dental and upgrade to a policy with a $650 annual limit for general dental, you’ll be required to serve any relevant waiting periods before accessing the additional $150 annual limit.
But you should consider if the annual limits will be adequate for your needs, and be aware that some funds have lifetime limits for some treatments like orthodontics.
Many health funds offer benefits that are sometimes called loyalty bonuses, which can include:
While you may lose some incentives from your old insurer, you might gain some new ones that suit you better by switching.
Any Australian Government rebate you received for your old policy will still apply to your new health insurance policy, provided your eligibility hasn’t changed and you choose to claim the rebate as a discount on your premiums. If you’re currently enjoying a lower premium or a yearly rebate at tax time, you can continue to do so, as long as your income and age threshold hasn’t changed.
Changing health insurance providers will not affect your Lifetime Health Cover loading (LHC) status. In fact, if you’re already paying the loading, you’re paying extra for health insurance as it is – so it’s worth seeking out better value policies and potentially minimise costs.
The same goes for the Age-based Discount. You’ll continue to receive your percentage discount on hospital cover until you hit the age limit in your forties, but only if you move to another policy with a retained Age-based Discount. Even if you switch health insurance after you turn 30, you can keep your discount if your new insurer offers it.
Whether you’re looking to switch health insurance to save money or find a new policy that better suits your needs, the first step is to:
Through our online comparison service, you can compare policies from a range of health funds to see if a new policy could better meet your needs.
When you’ve found a new policy that you think is a better fit, the next step is to apply, which is a quick and easy process. You’ll need to provide your new insurer with your membership number from your previous health fund. They will also require your Medicare card number, which will allow your new fund to start the process of applying the Australian Government rebate.
Once you’ve signed up, your new insurer will get in contact with your previous health fund to cancel your old policy. They will obtain a clearance certificate (sometimes called a transfer certificate) which is a record of your health insurance history, including any waiting periods that you’ve served. You can start claiming on services that you’ve already served the waiting periods for once your new fund receives this certificate. Any payments you’ve made in advance or overpaid will be refunded by your previous health fund.
Now that your old policy has been cancelled, you are ready to start your new cover! Your membership cards should arrive in the post shortly.
A helpful hint: Remember to cancel any direct debits to your previous health fund. This will ensure that there’s no overlap in payments.
Yes, you can switch health insurance providers whenever you like. If you have paid any premiums in advance, your old fund is required to refund the balance. Your insurer may choose to charge you an administration fee on cancellation, although this is very rare and will usually only be a small, affordable sum. This means you’re not penalised for shopping around for a policy and insurer you like.
Health insurance premiums may increase every year at the discretion of the insurance provider (within the limits set by the Australian Department of Health). This makes it an excellent time to consider a better deal with another provider. Your health fund will notify you in advance about how much you can expect your premiums to rise, giving you plenty of time to potentially find a better value policy for your needs with a different health fund.
Should you only want to cancel your policy instead of switching, you can contact your insurer directly. You can cancel your health insurance policy at any time, and your previous health fund will refund any premiums you’ve paid in advance, minus any cancellation fees.
Keep in mind that you will have to re-serve all waiting periods if you cancel your policy and re-join after the acceptable “gap in cover” period as set by each individual insurance provider. An extended absence from cover could also see you facing LHC loading on your insurance premiums if you take out insurance again; plus, you could lose an Age-based Discount. An alternative to cancelling your private health insurance altogether is to switch to a new fund with a lower level of cover to maintain these benefits.
High-income earners should also be aware that they may be subject to the Medicare Levy Surcharge (MLS) if their income exceeds a certain threshold and they’re not covered by private hospital insurance – standalone extras cover will not avoid the MLS.
One way we help you switch is by providing a simple-to-use online comparison service, though if you feel more comfortable talking over the phone, that option is also available. Once you sign up through us, your new health fund will act on your behalf to cancel your old policy and request your clearance certificate from your previous health fund.
Depending on the start date of your new policy, if there’s an overlap with the premiums you’ve paid your old health fund, they will refund the difference to you. Just keep in mind that you may need to cancel any direct debits to your old health fund with your financial institution.
Ready to make the switch? Try our easy-to-use comparison tool today.
