Need to know
- Sometimes it can be tricky to know exactly what your private health insurance policy does and doesn't cover.
- The current COVID-19 wave has caused another suspension of elective surgeries in some states, which means you may currently be paying for coverage you're not able to use.
- CHOICE experts have compared health insurance policies to find you the best deal. They always advise checking with your health fund and clarifying costs before agreeing to any procedure.
The COVID-19 pandemic has yet again caused many elective surgeries to be suspended, meaning you're likely paying for private health insurance (hospital cover) right now that you can't use.
Normally, there are benefits to having private health insurance if you need certain procedures or treatment (such as avoiding lengthy public hospital waitlists and being able to choose your own surgeon), however it's no good to you if you can't use it when you need it.
It's therefore important to understand what is and what isn't covered by your policy and which conditions/procedures may have limited coverage options. Then you can assess if you really need to retain the cover, if you need to switch coverage levels, or if you need to add or drop Extras coverage.
Here are five costly health insurance traps you should be aware of.
If you anticipate that any of these circumstances may apply to you, or before proceeding with a hospital admission, you should check your policy closely or contact your health fund to confirm your level of cover, your excess and any other costs you may be liable for.
To ease the pressure on the health system caused by the current COVID-19 outbreak, non-urgent surgeries such as hip or knee replacements have been suspended in the ACT, NSW, Victoria and Queensland. There are also limitations to some elective procedures in South Australia and some hospitals in Tasmania.This means that you may currently be paying for Hospital cover under your private health insurance policy that you are unable to use. For some people, it may make sense to suspend your coverage, particularly if you are in financial difficulty because of a job loss or illness related to the pandemic.
If you wish to suspend your coverage to save money at this time, speak to your insurer
You do not need private health insurance if you require treatment for COVID-19 because your treatment in a public hospital is covered under Medicare. If you wish to suspend your coverage to save money at this time, speak to your insurer.
The benefit of a suspension is that you won't have to serve waiting times when you take it up again. But, you won't be covered should you need health insurance during a period of suspension.
CHOICE tip: Many people don't realise that Extras cover is optional and that you don't need it to save tax. It only makes sense if you get back more in benefits than you pay in premiums, and many people don't. You also don't need to purchase Extras from the same insurer as your Hospital cover. You can even buy Extras on its own if that option suits you. Read more about how to find the best Extras policy
If you need a dental procedure such as having your wisdom teeth out, you may opt to do so either in the dentist's chair at your dental surgery or in hospital under anaesthesia. If you opt to have them removed in the dental surgery, you may be able to have a portion of the fee covered under your Extras policy if you have a suitable level of cover and have served relevant waiting periods.
However, if you opt to have the teeth extracted as an in-patient in hospital, you may find yourself facing additional out-of-pocket costs.
There are two types of health insurance – Hospital and General Treatment (Extras cover) and you need both for cover of your wisdom teeth surgery in hospital. There are a number of different costs involved, including hospital accommodation, doctors' fees and dentists' fees.
Your Hospital policy may pay benefits towards your accommodation or anaesthetist for a wisdom teeth extraction but you can only receive benefits towards your dentist/surgeon's surgical fee if you have Extras cover, provided your level of cover includes surgical tooth extraction.
So basically you will use your Hospital cover for the hospital admission part of the costs, but you will need to have Extras coverage to claim anything back on the surgical fee.
The cost of wisdom teeth removal varies depending on where you live, your clinical circumstances, the treatment options open to you, and which of those you choose:
- For a simple case at your normal dentist (including local anaesthetic), the average fee is $175 to $230 per tooth.
- For a complex case in hospital or day surgery by a specialist (day surgery and anaesthetist fee not included), the average fee is $385 to $475 per tooth.
Source: Australian Dental Association (ADA) fee survey, 2020.
Prior to admission to hospital, you should request an estimate of fees from your general dentist or oral surgery specialist, speak to your insurer and check that you understand the costs you will be required to pay before consenting. Read more about dental fees.
Specialists like obstetricians and paediatricians can incur unexpected out-of-pocket costs.
Both private and public hospitals provide high-quality care for pregnancy and birth in Australia. The main advantage of going private is that you can choose the obstetrician who cares for you during your pregnancy and attends the birth.
However, health funds are not allowed to cover out-of-hospital care for pregnancy management so even if you have private health insurance, large and sometimes unexpected out-of-pocket costs can arise for private care.
For example, each time you visit your obstetrician, you may have out-of-pocket costs unless you are bulk billed, as Medicare only covers 85% of the Medicare Schedule Fee (MBS) if you visit a specialist (but it covers 100% if you visit your GP).
The amount of your out-of-pocket costs depends on if and how much they charge above the Medicare Schedule Fee. The largest cost may be the pregnancy management fee, usually between $3000 and $5000, of which Medicare only covers about $330.
CHOICE health insurance expert Uta Mihm says, "If you want to deliver your baby with an obstetrician of your choice in a private hospital, ask them to detail all costs you will be liable for at your first appointment. Check with your health fund for an obstetrician who uses the fund's gap scheme for the birth and one which would attend to you in a hospital that has an agreement with your health fund."
Another thing that won't be covered by your private health insurance is the visit from a paediatrician, which will happen in a private hospital a few days after you give birth.
Some cheaper 'Bronze' health insurance policies will cover insulin pumps.
If you have diabetes, you may require an insulin pump as part of your treatment. If an insulin pump is provided to you as part of an episode of hospital treatment and you have an appropriate Hospital policy, private health insurers are required to pay benefits towards the cost of the pump, as well as the hospital accommodation fees and the doctor's fee.
Some insurers also choose to cover the cost of insulin pumps in cases where hospitalisation is not required and this is listed in the 'Gold' group of cover options.
This may mean you think you need to have a Gold level of cover to make a claim for insulin pumps on your private health insurance.
However, if insulin pump coverage is the only aspect of top-level Gold cover that you require, you could be paying more than you need to. Our CHOICE experts have uncovered four Bronze policies that include coverage for insulin pumps. One of the cheapest of these is the Medibank Bronze Plus Progress with a $750 excess (there are cheaper Bronze policies if you don't require insulin pumps – compare different policies to find the best policy for your circumstances).
Private health insurers negotiate charge agreements with private hospitals around Australia.
If you are admitted to a hospital that your insurer does not have an agreement with, you could find yourself facing some unexpected out-of-pocket costs, for example, a daily charge for accommodation.
If you need to go to hospital and you have private health insurance, call your fund and ask which hospitals they have an agreement with so you're protected.
If you need a specialist hospital, such as a psychiatric hospital that treats eating disorders or an IVF clinic, make sure your insurer covers it
And if you need a specialist hospital, such as a psychiatric hospital that treats eating disorders or an IVF clinic, make sure your insurer covers it.
If your insurer hasn't got an agreement with the hospital you need to go to, ask the hospital which health funds they have an agreement with.
You can switch to another insurer until the day before your hospital admission. As long as you switch to a policy with the same level of cover and excess you won't serve waiting times.