Bupa and HBF cut private health insurance benefits


Meanwhile ombudsman asked to investigate Bupa's cuts to gap cover.

Pay more, get less


  • Bupa budget cover will soon exclude hip replacements, cataracts, pregnancy and other pricey hospital treatments
  • Bupa drops gap cover with non-agreement hospitals and for emergency department admissions to public hospital
  • Minister for Health has asked ombudsman to investigate changes to gap cover
  • HBF will cut cover for psychiatric, obesity surgery and dialysis on some policies
  • Record number of complaints to the ombudsman 

Government asks ombudsman to investigate Bupa

With premiums going up and benefits headed in the other direction across the industry, matters just got worse for Bupa customers.

After announcing a 3.99% premium increase from 1 April, Bupa has since announced:

  • from 1 August, members will face higher out-of-pocket charges (gap) in non-agreement private day facilities and hospitals 
  • from 1 August, members will face higher out-of-pocket charges (gap) if they give their Bupa member number when admitted to a public hospital in an emergency  
  • from 1 July, more than 700,000 members with restricted cover will receive fewer hospital benefits.

Federal Health Minister Greg Hunt has asked the ombudsman to investigate and review Bupa's gap scheme changes. 

Restricted policies vs exclusions

With restricted services you're only covered for treatment in a public hospital, but you can choose your own doctor and with luck have a private room. However, you'll have to wait in line with public patients to get your surgery scheduled.

For services like hip and knee replacements and cataract eye surgery, where wait times can be 12 months or more, these policies don't deliver much.

But with Bupa's latest changes, the restricted services on some policies will be downgraded to exclude certain treatments altogether, with the exception of psychiatric, rehabilitation and palliative care services.

"People need equitable, affordable access to quality healthcare. Health insurance products that provide very low value for customers, whether they are restricted or excluded cover policies, are undermining this," says Sarah Agar, CHOICE head of campaigns and policy.

HBF also cuts cover

HBF will cut cover for some of their basic and medium level policies by 1 July for some services including.  

  • psychiatric in-hospital care 
  • obesity surgery such as gastric banding 
  • sterility reversals
  • cochlear implants 
  • dialysis 
  • insulin pump

For some policies excesses will now apply also to day surgery. Until 1 September 2018, HBF customers who upgrade their cover will be exempt from some waiting periods. Normally a 12-month waiting period applies if you upgrade your cover.

Bupa customers: "What should I do?"

Take a look at what's changed in the policies we've listed below, and consider your health cover needs: 

  • If you think you'll need cover for any of the affected services in the next 12 months, it may be best to take up Bupa's offer to upgrade your policy to top private hospital cover.  You'll pay a higher premium, but they're waiving the 12-month waiting period if you upgrade before 1 July. 
  • If you don't think you'll need any of the affected services in the next 12 months, use our health insurance comparison to see if there's a better health policy for your needs.
  • If you only have access to a public hospital where you live, you should consider switching providers to one that provides gap cover with your local hospital.

Bupa's hospital policies – what's changed?

Bupa has five stand-alone hospital policies they currently sell. If your policy isn't among these, you either have a combined hospital and extras policy, a policy that's no longer available for sale, or a corporate policy. 

Bupa has sent letters to affected customers, but if you haven't heard from them and you think you should have, or you have further questions, contact them directly.

Basic cover

A low-cover policy with many exclusions – there won't be any changes to this cover, but it's worth reviewing whether it meets your needs. 

Take our quick quiz, Do I need health insurance? and if you still want cover, compare policies with our health insurance reviews.

Budget cover

This is the cover with the most changes. While you're currently covered for pregnancy and birth in a public hospital, you won't be covered from 1 July 2018. We advise that you review your cover – your best option may be to upgrade. 

From 1 July this cover excludes:

  • pregnancy and birth related services
  • fertility treatment such as IVF
  • hip and knee replacements
  • major eye (cataract and eye lens) surgery 
  • renal dialysis 
  • obesity surgery such as gastric banding, including abdominoplasty and lipectomy.

You're also only covered in a public hospital for psychiatric care.

Standard hospital

This covers pregnancy and thousands of other treatments in a public and private hospital. Four treatments that are currently covered in a public hospital will be excluded from 1 July. This isn't a big change, as public hospital treatment for these procedures is hard to get or has long waiting times. If you need them, upgrade to top cover. 

From 1 July this cover excludes:

  • fertility treatment such as IVF
  • hip and knee replacements
  • major eye (cataract and eye lens) surgery
  • renal dialysis.

Top cover

Covers all treatments and procedures covered by Medicare in a public and private hospital. There are no changes to this policy.

Top cover – no pregnancy

This cover is a bad option as it costs exactly the same as top cover but doesn't cover some services. Even if you don't need these services, we don't recommend this cover. This cover excludes:

  • pregnancy and birth related services
  • fertility treatment such as IVF
  • obesity surgery such as gastric banding. 

There are no changes to this policy.

How much will it cost to upgrade?

You'll pay considerably more if you upgrade to a policy with higher cover. As an example, if you pay your annual premium by 31 March and qualify for the full government health insurance rebate, it will cost you an extra:

  • $602 – for a single person in NSW upgrading from Budget Hospital to Top Hospital (both policies with $250 excess)
  • $1219 – for a family in Victoria upgrading from Budget Hospital to Top Hospital (both policies with $500 excess)
  • $1012 – for a couple in Queensland upgrading from Budget Hospital to Standard Hospital with pregnancy cover (both policies with $500 excess).

Higher out-of-pocket costs

In even more bad news, Bupa also announced changes to gap benefits from 1 August 2018. Gap benefits will no longer be paid in non-agreement private hospitals. In all public hospitals Bupa will only pay gap cover for admissions that were pre-arranged at least two business days prior, and not for patients admitted through emergency departments. 

A gap is the difference between what Medicare and your private health fund will pay towards your treatment, and what your doctor or hospital charges. You'll need to pay the difference (the gap), which is why it's also sometimes called your out-of-pocket cost. 

There are two types of gaps:

  • Hospital gap: for example, for accommodation and operating theatre costs. Bupa already didn't fully cover these costs in non-agreement day facilities and private hospitals, however, they normally covered these costs in public hospitals.
  • Medical gap: for example, for doctor and surgeon fees. Bupa patients will now also face higher out-of-pocket costs for doctors' bills in non-agreement private day facilities and hospitals and all public hospitals.

If you use a hospital that doesn't have an agreement with Bupa, including all public hospitals, you could face gap fees that go into the thousands. Initially Bupa had said that members wouldn't receive gap cover in public hospitals in all situations. But on 7 March the health fund reversed some of the changes, now saying that higher out-of-pocket fees would only apply to members who get admitted to the public hospital through the emergency department, and not to Bupa members who elect to be a private patient in a public hospital with their own doctor for a pre-booked procedures or surgery.

Bupa says: "Any person admitted to emergency should be treated as a public patient, it's why Medicare exists. When a patient is admitted to a public hospital as an emergency or acute patient and treated as a public patient, they should use Medicare to fund that treatment as it is designed to do so. Bupa has and will continue to work to eliminate out-of-pocket costs for its customers whilst ensuring unnecessary waste in the system does not add to Private Health Insurance premiums."

Here's an example of how reduced agreements could affect a Bupa member:

You're pregnant and overjoyed as you'll be having twin girls, but also concerned as you've been told your pregnancy is high-risk. You use the high-risk pregnancy department in your local public hospital. At 34 weeks complications arise and you're admitted to the labour ward. The hospital asks you for your private health insurance member number and you give it to them.

You deliver your babies soon after, and all goes well. But when the obstetrician sends you a $2400 bill for the birth, it's above the $1629 MBS fee. If you'd delivered in a Bupa-agreement private hospital you'd be fully covered, as Bupa's gap cover covers amounts up to $2407 for complicated births. But because you delivered in a public hospital and were admitted through emergency, you have to pay an extra $800.

Bupa told us they currently have 96% of private beds under agreement but no public hospitals.

Record number of customer complaints

The Private Health Insurance Ombudsman has revealed that complaints about insurance and health funds increased by 30% in 2016–17 to hit a record high. A large number of them were about Medibank following IT bungles that delayed tax statements and charged customers wrong premium amounts. 

Bupa defends changes

Bupa says removing restrictions and replacing them with exclusions will make affected policies easier to understand.

"If customers went to a private hospital they were only covered for the shared room public hospital rate, which left them with a large out-of-pocket cost," says Bupa spokesperson James Howe.

Restricted policies in general already had problems before the Bupa announcement. The Private Health Insurance Ombudsman has repeatedly warned that downgrading policies to restricted or budget cover often leaves customers without the cover they need or high unexpected out-of-pocket costs.

In the last quarter, the highest number of complaints to the Private Health Insurance Ombudsman were about restrictions and exclusions.

"Consumers need an easier way to understand which products provide adequate cover and are good value for money. The government should act to scrap junk policies, and make sure that these policies are not eligible for health insurance rebates," says Agar.

"If you're struggling with the cost of private health insurance, it's worth using CHOICE's free tool, Do I Need Health Insurance? to cut through some of the complexity and marketing spin."

How can I save on health insurance?

All health funds will be raising premiums from 1 April, so now's a good time to review health cover. 


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