How to read the letter from your fund
New government changes to health insurance come in on 1 April.
If you haven't already, you'll soon get a letter from your health insurance fund about changes to your policy.
We've analysed over 1000 recent letters from Bupa, Medibank, NIB, HCF and more. Here, we explain how to read the letter from your health fund and how to decide whether or not you should switch.
First, these are the essential parts of your fund letter to check out:
Should you switch before 1 April?
In most cases it's better not to switch before 1 April unless you're losing cover for something you really need. Finding the right policy to switch to before 1 April might be difficult, because many policies are changing and new ones will be released on that date.
Also note that some health funds will change some of their policies on later dates. Some funds will give you until 1 May, 1 July or even longer.
Key things to check:
Check your policy's 1 April price rise and what it will mean for your budget. For example, if you're a single with top hospital cover, the average premium increase of 3.25% could mean you'll pay about $83 more a year. A family with top cover might need to budget an extra $165.
Our usual advice is to prepay 12 months in advance to lock in the price you're paying now, but it's a bit more complicated this year. Most people might be better off waiting to see what new policies are available, or making the decision based on changes to their cover.
- You may have lost cover for some services. If you need this cover – for example, you're planning a pregnancy or anticipating a hip replacement – upgrade or switch policies before before the changes come into effect (1 April or 1 July, for example) to avoid re-serving waiting periods for these. (Waiting periods can be up to 12 months.)
- If you don't need this cover, consider switching policies after 1 April when more are available, as you could save money.
What if you're already using the cover you're set to lose?
If you're currently having treatment, are pregnant or have surgery booked, the changes may not affect you for at least three to six months. Call or email your insurer to confirm.
If you don't need this cover, consider switching policies after 1 April when more are available, as you could save money.
CHOICE tip: If your fund upgrades your cover you usually won't have to serve a waiting period for the new services. Call or email your insurer to confirm.
- If your policy has stayed the same, with just a name change, you could consider prepaying 12 months to lock in your current price. But if you want to check whether you're getting the best deal, wait until 1 April when new policies hit the market.
- If your policy hasn't changed for now, be aware that most hospital policies will change at least their name before April 2020. So watch out for another letter from your insurer.
Natural therapies like homeopathy, naturopathy, Pilates and yoga will no longer be covered by your extras policy under the new rules.
If you want to keep cover for exercise classes, choose a policy that includes:
- gym membership
- exercise physiology
- physiotherapy (check you're covered for Pilates-type exercises that are tailored for your health condition and provided by a registered physiotherapist).
CHOICE tip: Get the most out of your existing extras cover for natural therapies – use it before you lose it on 1 April.
Check if your excess will go up, or if your existing policy didn't have an excess, check if it now will.
An excess is a contribution towards each hospital stay that you can opt to pay to reduce your premiums. So a new or increased excess could mean a smaller premium increase or even a decrease in your premium. But not everyone will want to pay an excess.
Should you accept a new or increased excess?
- If you're not likely to go to hospital in the next year (i.e. you have no current health problems) and therefore not likely to have to pay the excess, stay on your policy to take advantage of the reduced premium.
- If you think you'll go to hospital in the next year (e.g. you're planning to get pregnant or think you'll need surgery soon) switch to a policy with a lower excess before the changes come into effect such as 1 April or 1 July, for example.
How you can save this year
Pay your full annual premium before 1 April to lock in the lower rate. Or if you want to shop around after 1 April, prepay for three to six months, and compare and switch policies once funds have released their new policies.
CHOICE tip: Prepaying your premium doesn't lock you in with your fund – if you switch or cancel your health insurance later, you'll get a refund.
Choose a higher excess
Higher excesses than previously available (up to $750 per person and $1500 per couple/family) will be an option on some policies after 1 April. Choosing a higher excess will reduce your premium and could potentially save you more than prepaying.
Get an under-30s discount
For every year you're under 30, funds will now offer a discount of 2% on your premium on some policies, up to a maximum of 10% for 18 to 25 year olds. You can keep the full discount till you're 40, if you don't switch cover before that.
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