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Should you drop extras health insurance?

Private health insurance is increasingly expensive and your extras health insurance may not be giving you value for money.

Person with back pain visiting a physiotherapist
Last updated: 06 August 2021
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Unlike hospital insurance, which covers you for treatment in hospital, extras insurance helps pay for services outside of hospital, such as dental care, glasses and treatments like physio or chiro. 

Most extras policies only pay a percentage of capped amount towards the cost of these services. According to APRA*, on average:

  • you're out of pocket by about $52 for each extras service (for example, the average benefit for a visit at the physio is only $40) 
  • you only get $410 per person per year in total from your extras policy.
*APRA quarterly health insurance statistic, March 2021.

If your extras insurance doesn't pay out more than your extras premium, it pays to either switch to a better policy or drop it altogether. Compare health insurance now to see if you can get a better deal.

How much does extras health insurance cost?

The average extras cover for a single person costs about $810 per year (without the health insurance rebate). But there is a wide range of covers and premiums, so it pays to shop around.

Bupa and Medibank extras health insurance

Australia's two biggest health insurance companies, Bupa and Medibank, have a range of extras policies. The catch with their policies is that to get the full benefits, you need to use their provider network. If you want to use your own dentist and they're not in the network, your benefits will be smaller.

Bupa, Medibank – most expensive extras health insurance 
  • Bupa's most expensive extras cover is Top Extras 90 and costs about $2230 per year*.
  • Medibank's most expensive extras cover is also called Top Extras 90 and costs $1905 per year*.
  • The deal with both policies is that they cover a wide range of services including specialist services like hearing aids or home nursing and pay up to 90% of your bill up to  annual limits at their associated providers. Bupa and Medibank pay at least 90% for popular services including dental, optical, physio and chiro, as long as you go to one of their network providers. You can go to providers outside the fund's network but you may receive a smaller benefit. 
  • It's a tall order to use enough services to get your premium back in benefits, let alone more, therefore we've called them bad value extras health insurance. 
Bupa, Medibank – cheapest extras health insurance
  • Bupa's cheapest extras cover is Freedom 50 at about $225 per year.*
  • Medibank's cheapest extras cover is Essential Extras 60 at about $365 per year.*
  • Bupa's policy pays 50% of your bill at all providers for general dental, physiotherapy, chiropractic and osteopathy and up to a total maximum limit of $500, which increases by $100 each year up to $700. The catch is that if you need a new pair of glasses or a massage, it's not covered.
  • Medibank's policy covers a larger range of services and has a total annual limit of $950, which includes $400 for general dental, $300 for physio and $150 for optical. So while with Bupa's policy you can use the annual limit flexibly across the services covered, with Medibank if you run out of money for physio but don't need glasses, you can't use your optical limit to top up your cover for physio. 
  • Both policies also include ambulance cover – read more about ambulance cover.
  • Are they good value? It depends. If you use enough of the services they cover, it's a lot easier to get your money back than with the most expensive policies. But there are very low benefits for the services you use. For example, you only get just over $23 with Medibank for a dental examination at a provider outside their network. So you'd still need to use a lot of services and since they only cover part of the costs, you'd have to pay a significant amount of the bills yourself.

While Bupa and Medibank have a good range of extras policies, some other providers offer better value cover. Compare health insurance to see what your options are.

*All premiums for singles in NSW without the health insurance rebate, 1 July 2021.

How to give your extras cover a check-up

As many people pay a higher extras premium than they get back in benefits, it's important to work out if your extras health insurance is offering you value for money.

  • Request or download an annual claims statement from your fund's website, which shows the total benefits you received in the last financial year.
  • Compare your premium with your extras benefits. Are you paying more than you're getting in return?

If, like many people, you have a combined extras and hospital policy, a bit of maths will come in handy.

  • Select a hospital insurance policy from your fund that's comparable to the hospital cover in your combined policy (with the same excess and cover level). 
  • Deduct its price from the premium you pay. 
  • The difference will be the amount you pay for extras health insurance.

If you find your premium is substantially higher than the benefits you receive and you don't anticipate your health needs will change anytime soon, consider switching to a less expensive policy or cancelling extras health insurance altogether. 

If you cancel your extras insurance, be aware that you'll be subjected to waiting periods before you can make a claim if you take up extras again. If you switch cover, your new provider may not make you wait again if the new policy has similar benefits.

Will I be penalised if I drop extras cover?

Perhaps you signed up for health insurance to avoid the government's Medicare Levy Surcharge (MLS) and the Lifetime Health Cover (LHC) loading. Well, your insurer might have 'forgotten' to tell you that government surcharges only apply if you don't have private hospital insurance – you don't need extras to avoid the charges. Check if hospital insurance can save you money at tax time. 

CHOICE tip: Health insurers often have specials that allow new members to claim straight away for many health services like a dental check-up or physio treatment (although usually not the more expensive ones like dental crowns or braces).

Who can benefit from extras cover?

Extras health insurance works differently to other types of insurance.

  • Hospital, home, travel and car insurance cover you for unexpected events that may otherwise cost you thousands.
  • Extras insurance works more like a budgeting tool. It's meant to help with smaller ongoing costs, such as a dental check-up, pharmacy costs, physiotherapy, going to the osteopath or a new pair of glasses.

Two groups of people get good value from extras insurance.

  • Families: Families pay the same health insurance premium as couples – or double the singles premium – so children are insured for free. Some health funds offer no-gap cover for kids, for example for dental. Read about the best health insurance for families.
  • People aged 55–79: Of all the age groups, this one makes the most claims on their extras cover benefits and therefore receives a much larger average benefit per person than other age groups. Read about the best health insurance for seniors.

Couples, on the other hand, can lose out. A couples policy normally costs exactly the same as two single policies. So if a basic policy suits you best but a medium policy suits your partner better, go for two different extras cover policies rather than a medium-cover couples policy. Read about the best health insurance for singles and couples.

Tips and tricks to get more out of extras health insurance

Look for percentage benefits

Rather than simply paying a fixed amount for a service, such as up to $30 for a physiotherapy session, some policies cover a percentage of your bill, usually from 60% up to 100%. This can be useful if you go to a dentist or other healthcare provider who charges above-average prices. Where these types of benefits apply, it's worth making sure they apply to the providers you usually use.

Look for funds with provider schemes

A number of health funds offer provider schemes or even their own optical or dental centres. The fund may have negotiated a price (usually lower than the normal price) with, for example, the dentist or optometrist, and may also pay a higher benefit to you. Full cover for services such as a dental check-up or a pair of glasses is sometimes available.

Check for loyalty bonuses

Some health funds pay higher benefits to loyal members. While this is good for you if you've been with them for a long time, it can be a disadvantage for new members since your time with another fund is not counted towards these bonuses.

Have you used your lifestyle cover?

Some extras policies offer benefits for services such as massage or gym classes and even sunscreen.

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