Top 7 tips for choosing health insurance

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 seven essential tips to assist you in finding insurance.

1. Find cover for services you’ll actually use
2. Learn how much you can claim, and when
3. Seek out discounts and rebates
4. Understand the tax implications
5. Think about what life stage you’re at
6. Adjust your policy to make it more affordable
7. Be certain about your ambulance cover

Keep an eye out; the end of our guide reveals our last, best tip.

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’ll use, or think you may require.

The introduction of the four-tiered health insurance categories has made it easier than ever before 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 in more circumstances. You also have the option of a combined policy, which includes both hospital and extras cover (for out-of-hospital medical care).

You should also take the time to assess your extras 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).

An excellent place to start is to talk with your doctor to discuss what services you should consider cover for.

2. Learn how much you can claim and when

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:

• between two and 12 months for most extras products;
• 12 months for any pre-existing condition;
• 12 months for pregnancy and birth-related services; and
• two months for palliative care, rehabilitation and psychiatric care.

You’ll also need to enquire about any annual limits your policy may be subject to. You can only claim up to a certain amount for each service, which resets every 12 months.

3. Seek out discounts and rebates

The Federal Government wants you to take out health insurance because it eases 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.

4. Learn how private health insurance can impact tax

Conversely, there are also levies imposed on some who don’t have appropriate levels of cover.

• Lifetime health cover loading. People who don’t take out private hospital insurance before 1 July after their 31^st birthday will pay more for cover when they do take it out. This loading is two per cent for each year you didn’t hold cover from the 1^st July following your 31^st birthday (e.g. 35-year-olds pay a 10% loading).
• Medicare levy surcharge (MLS). High-income earners are subject to paying a surcharge of up to5% (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.

5. 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 for partners 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?

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.

6. 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.

7. 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.

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 tip: insurance doesn’t have to be forever. Reassess it 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 to use, free and takes just minutes to reach a result.

Curious how private health insurance compares to Medicare? Learn more about the difference between the public and private health system with our guide.