Health insurance comparisons

The doctor is free to decide on a case-by-case basis if they will treat you under these arrangements. By using a hospital and doctors that have an agreement with your fund, you have a better chance of reducing out-of-pocket costs. 

CHOICE recommendations take into account gap ratings across the individual states and territories.

Your local hospital or doctor may not have an arrangement with your fund, in which case you may be able to save money by switching to a fund that does. You can do this even a short time before treatment, such as surgery, without having to serve a waiting period, so long as you switch to the same level of cover (such as full cover with no excess) with the new fund.

Fast tips for avoiding out-of-pocket fees

• Review your policy Make sure it is still suitable for your circumstances. Talk to your fund if you’re not sure you’re covered for any treatments you may need.
• Review your excess and co-payments Consider upgrading to a policy without an excess. However, keep in mind the 12-month waiting period for pre-existing conditions that applies if you upgrade to a higher level of cover, even if you stay with the same fund.
• Doctor’s gap cover arrangements Ask your doctor if he/she has gap cover arrangements with your fund and if you will have to pay any out-of-pocket costs. Get this information in writing.
• Other services Ask your doctor if you will be billed by other doctors who may treat you, such as an anaesthetist or surgeon’s assistant, and how you can get an estimate of their fees.
• Hospital gap agreement Ask the hospital if it has a current agreement with your fund and if there will be any out-of-pocket costs. Confirm any information you get from the hospital and doctor with your fund.

Self insurance

• It's important to remember that, under Medicare, all Australians are entitled to free treatment in a public hospital, regardless of their insurance status. Self-insurance involves meeting your own costs for private treatment. This may mean saving the money you would have spent on insurance in a separate account or an accessible investment.
• The problem with self-insurance is you don’t know how much you’ll have to pay. If you’re in hospital for longer than you expected you could end up with a very large bill. If your money runs out, you may have to become a public patient in a public hospital, which could be unsettling and complicated partway through treatment.
• One possible incentive for self insuring is you can claim a tax rebate on your medical costs after a cap. For more information check wiht the ATO.

Self insurance traps:

• You can’t make use of any of the government incentives like the 30% rebate.
• You may have to pay the Medicare levy surcharge if you’re above a certain income.
• You may have to pay a higher premium if you decide to take up hospital insurance after you've turned 31.

Medium level cover is often as expensive as top level cover, so choose carefully and make sure any savings are worthwhile. For those on a budget but still looking for top cover, you may be able to add an excess to a top level policy to save money on your premium. Top cover with no excess reduces budget surprises, especially for an active family with more than two people on the policy (therefore increasing the likelihood of a claim).

Once you have a rough idea of the level of cover you would like, you can then visit the privatehealth.gov.au website, and begin to compare policies in your area. Some tips to keep in mind:

• Check the policy details on the Standard Information Sheets, which you access by clicking on a product after you have completed a search.
• Watch for restrictions and exclusions. A common mistake people make is believing they will not need a restricted procedure, such as medically necessary plastic surgery. However, in the event of a bad accident (for example), you may be left disappointed if it turns out you need the cover after all.
• Consider the out-of-pocket ratings, and check what arrangements an insurer has with your local hospital and doctors. This can save you having to pay a gap in the event of a claim.
• To save time, check out CHOICE health insurance recommendations.
• When you find a policy you like, request a copy of the Product Disclosure Statement (PDS) and spend some time understanding the fine print. If you have any questions, you can approach the insurer before you buy.

Extras/ancillary cover

Use extras health insurance as a budgeting tool for non-hospital treatments that aren’t covered by Medicare — for example, dental treatment, physiotherapy, glasses and contact lenses, plus less common treatments such as acupuncture and podiatry. Some extras policies cover complementary treatments like massage. You can compare policies using the government's private health calculator, including policy details by clicking on a product and viewing the Standard Information Sheet (SIS).

Some tips to keep in mind:

• The level of cover you need all depends on how much you expect to claim. If you don't use a lot of services, basic or medium cover may be enough. If you have a family with kids that play sport and also may need things such as orthodontics, you might be better off considering top level cover.
• Check out what services are included, the maximum annual limits (after waiting periods) and the sub limits. The maximum limits are fairly self explanatory, but with more people on a policy making claims, you have more chance of reaching the limits. The sub limits restrict how much you can claim in a single visit.
• Usually, waiting periods apply before you can make any major claims. However, sometimes insurers will waive waiting periods as part of a promotion.
• Some funds restrict the overall limit by combining the maximum limits — for example, saying you can have $400 worth of physiotherapy and chiropractic in a year instead of $400 for each. This restriction can mean very large differences in how much you’ll get. It’s also worth noting the difference between family limits and single limits. Some policies limit the number of times a family can claim for some services.
• Some funds increase limits every subsequent year you are a member (set to a maximum amount). This rewards member loyalty.
• Orthodontics often has a maximum lifetime limit - the most you can claim for this service while ever you are with the provider. Hearing aids and other devices may have similar restrictions - you may only be able to claim on one every couple of years.
• Check whether the health care provider of your choice (such as an acupuncturist) is covered by the fund. Some funds have preferred providers, but that doesn't mean all services are covered in full. Always check before getting a procedure, and don't be afraid to seek a second opinion.
• CHOICE also recommends extras policies as part of this guide. However, you should also make any purchasing decisions on your individual scenario.

What about combined?

Combined polices are a package offered by insurers that cover both hospital and extras. While this is no doubt convenient, CHOICE has also found that combined insurance often has at least one component lacking in quality compared to what is available when shopping for each level of cover individually. Not all combined packages represent poor value, but we have not recommended combined policies this year and are recommending that the many people with combined insurance take this opportunity to assess what they are paying against our recommendations. 

Different rates for different people?

Health insurance operates on a community rating system. That means that everyone pays the same premium regardless of age or your current state of health. However, the system does employ various methods to ensure it remains fair and viable, such as waiting periods and the lifetime cover loading of 2% for every year over the age 31 that you do not have health insurance. You normally have to wait 12 months before receiving treatment for a pre-existing condition. The rates are then organised to the number of people on the policy. There is a rate for singles, couples pay double and families with dependants (read children) pay the same as couples. Some policies allow you to include adult dependants still living at home for an additional premium.

Since 2007 new rules enable health funds to discount policies for single parents. Discounts vary between funds and policies, so if this affects you, shop around for a good deal.

Tip:

If there’s no difference in cost, couples may be better off choosing a family policy. That way they won't have to alter their cover if they start a family.

The 'bells and whistles'

Many funds have other features, including their own dental or optical clinics that entitle you to a higher benefit, ambulance cover included with extras cover, cover for Chinese herbalism or massage therapy. If you want some particular extra features, this may be a factor in which fund to choose. However, read the brochures carefully and check if the fund is more expensive than one without the trimmings, especially if you don’t think you’ll be using them.

Hospital cover

• Are any treatments excluded?
• Are any treatments restricted to public hospitals?
• Are any treatments initially limited to care as a private patient in a public hospital?
• Are there any limits to treatment, even with so-called 100% cover? For example, you may only be entitled to a certain number of overnight stays overall, or there may be day limits for specific treatments such as for psychiatric or intensive care.
• What excess/co-payment applies? Is there an annual maximum per membership? How does your excess or co-payment work?
• Is the hospital you want to go to an agreement hospital with the fund?
• Does the fund have an agreement with your doctor to cover the ‘gap’ between the actual charge and the Medicare Schedule fee?

Extras/ancillary cover

• If extras benefits are listed as a percentage, is it a percentage of any fee charged, or a percentage of a ‘reasonable fee’ set by the fund?
• What are the annual limits for extras benefits and do these apply per person or per membership?
• Do providers of extras services need to be registered with the fund? Some funds require practitioners to be registered with the appropriate state board. Others require them to be specifically registered with the fund, which can limit the practitioners you can go to. If there is a specific register, make sure you contact the fund to find out if a practitioner is on it before you get treatment, otherwise you won’t get a benefit.

Ambulance cover

• Usually included in hospital policies and sometimes offered with extras policies. Ambulance cover can vary greatly between funds. Some only cover emergency transport direct to hospital after an accident (and no further transport if you need to be sent on to another hospital).
• Others cover all types of ambulance transport. Check the fine print, as your cover may not be as good as you think.

Tip:

• Health funds may offer special incentives such as free cover for a period of time. Ask the fund you'd like to join if it has any special offers or is prepared to match an offer from another fund.
• Some health funds reward long-term members with special bonuses such as a higher claims limit for extras treatments. If you're entitled to these bonuses with your old fund, ask your new fund whether it is prepared to match the deal.

If all else fails, try the Ombudsman

If you have a complaint about your health insurance fund that you can’t resolve with the fund, contact the Private Health Insurance Ombudsman on 1800 640 695 or www.phio.org.au.

The website also offers information about health funds, and allows you to order a free booklet about how to switch companies, called The Right to Change.

The range of benefits paid varies between funds, and the payout is unlikely to cover the whole cost of the treatment. Private hospital insurance means you can be more certain of having your choice of doctor. If you’re admitted as a public patient, the hospital assigns a doctor to you.

The other key attraction is that private patients usually have shorter waiting times for elective surgery. 'Elective surgery' is treatment for a condition that isn’t immediately life-threatening. But that doesn’t mean that the surgery is unnecessary or the condition is not painful. For example, if you need a back operation or kidney stones removed, the shorter the wait, the better. Check out our page Do you need it? to see some other common considerations.

Levels of hospital cover

There are four different levels of hospital cover:

Full (top) cover

These policies cover you in private and public hospitals as a private patient, allowing you to choose your own doctor and jump hospital waiting lists. Top level policies must cover all services where Medicare pays a benefit. This is usually the best option if you expect you’ll need treatment in a hospital over the next few years, or want to make sure you’re fully covered should something unexpected happen. Close to four in five CHOICE members with hospital insurance choose this type of cover.

Medium and basic cover

We put these two categories together because both levels of cover will restrict or exclude some services.

• Restricted: If a service is restricted, you are only covered in a public hospital as a private patient, not in a private hospital. This means you can choose your own doctor, but normally can’t jump public hospital waiting lists.
• Excluded: For an excluded service, you’re treated the same as someone without insurance. Some budget policies increasingly cover only a short list of services, exclude some and restrict all others.

Commonly restricted and excluded services include major heart surgery, hip and knee replacements, eye surgery, plastic and reconstructive surgery, pregnancy and assisted IVF, psychiatric care, rehabilitation, renal dialysis and palliative care. For services that are not restricted or excluded, you will be treated as a private patient in a public or private hospital (often, this will depend on your fund, its agreement hospitals and your own personal preferences). 

Public hospital only

All services are restricted to cover you in a public hospital as a private patient.

Levels of extras cover

There are three different levels of extras cover available. Extras may also be called general treatment or ancillary.

• Top (comprehensive) Should include most services, including all dental. This level of cover generally has the highest annual benefit limits (the most you can claim once waiting periods are served) and sub limits should be above average (most services also have sub limits, which is the max you can claim in a single visit). Use our tips on comparing health insurance if you're unsure about what limits you need.
• Medium Still covers most services, including dental. The maximum annual benefit limit is lower, so this level is typically more suitable when less people are on the policy or for those who find they aren't claiming enough to justify top extras. Keep an eye on sub-limits as this restricts the amount you can claim at the one time.
• Basic You won't have cover for all services at this level, but you can compare policies and pick and choose between things you think you might use. Check the sub limits carefully and factor this into your overall budget.

Excess and co-payments

You can choose an excess or co-payment to save on your premiums. The higher the excess or co-payment, the cheaper your premium.

• An excess means you pay a certain amount (such as $500) towards the cost of your treatment, usually once per hospital stay.
• With a co-payment you pay an amount (for example $50 a day) for a certain number of days each hospital stay. We've only included policies which have an annual maximum limit for excess and/or co-payment.

TIP: Some funds don't charge excesses or co-payments for children on a family or single-parent policy.

Gap (out-of-pocket expenses)

When you have hospital treatment as a private patient, Medicare will pay 75% of the MBS fee (a fee for every medical service set by the government). Your private health insurer will pay 25%.

Gaps for doctor's fees come about when you're charged an amount above the MBS fee. This includes not only your doctor/specialist but also other doctors involved, such as an anaesthetist. If the doctor uses your health insurer's gap cover scheme, the insurer can pay more than the usual 25%, resulting in less out-of-pocket expenses for you.

Your insurer may offer:

• No Gap schemes: You won't occur an out-of-pocket expense.
• Known Gap schemes: You will be informed about any out-of-pocket expense beforehand.

The amount different health funds pay under these schemes differ. You may have a better chance of your doctor deciding to use the fund's scheme if the fund allows for a greater amount. This also means that your chances may not be as good if your fund only offers a No Gap scheme.

Always check with your doctor if they will use the fund's gap scheme, as doctors can decide on a case-by-case basis whether they use your insurer's gap cover scheme. Also always check with your hospital if it has an agreement with your fund to make sure you won't incur a gap for hospital costs such as accommodation.

Lifetime health cover

Lifetime health cover penalises people who take out hospital insurance later in life, by increasing their premiums. If you're aged 31 or more and have not already signed up for health insurance, you'll pay higher premiums than someone who joined at age 30 or younger.

• Age 31 is not the exact cut-off point. Depending on when your birthday is, you may have a little more time to avoid the additional surcharge. The cut-off date is the first time 1 July occurs after your 31st birthday. If you turn 31 in January, you'll have until 1 July that year to apply, before you'll go into the age category that does incur a surcharge.
• If you are affected by the surcharge, it amounts to 2% extra per year, up to a maximum surcharge of 70%. So, for example, if you join at 45 you pay 30% more than someone who joined at age 30.
• After you've paid the surcharge for 10 years, your premiums revert back to the normal premium paid by people who joined before their 31st birthday.

Medicare levy surcharge

Medicare Levy is a 1.5% tax paid by everyone, regardless of whether they have private health insurance (unless they’re able to qualify for an exemption or reduction).

Medicare Levy Surcharge (MLS) is an extra tax for high-income earners on top of the Medicare Levy that you can avoid by taking out hospital cover. You can choose cover with an annual excess of up to $500 (single) or $1000 (family). It was 1% for everyone above the cut-off, but from 1 July a stepped rate of 1-1.5% will apply. See our report.

Premiums

All premiums shown in this article are rounded monthly family or couple premiums, without any government rebate.

Some funds may give you a discount if you pay by direct debit and/or annually instead of monthly.

Waiting periods

Hospital insurance waiting periods are regulated and can be a maximum of 12 months for obstetrics and pre-existing conditions and two months for any other condition.

Extras insurance waiting periods vary from fund to fund and can range for two months for a dental check-up, six months for new glasses, 12 months for major dental and up to three years for hearing aids.