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Should you keep or drop your health insurance during the COVID-19 crisis?

Elective surgery suspended in Victoria

Last updated: 22 July 2020

Need to know

  • In Victoria, only urgent category 1 and the most urgent category 2 elective surgeries, will still go ahead. Category 3 such as hip and knee replacements are suspended.
  • State governments in NSW and Queensland have put extra funding in place to clear the elective surgery backlog and some public patients are being treated in private hospitals for free
  • Some extras services are still impacted by social distancing measures

You don't need private health insurance to cover you in hospital if you have COVID-19 coronavirus. 

But what about elective surgery? Most states have resumed elective surgery, and some public patients are being treated in private hospitals for free, but Victoria has reintroduced restrictions on elective surgery.

So should you keep or drop your health insurance?

You should keep your health insurance during COVID-19 coronavirus if you:

  • need it for tax reasons - take our quiz: Do I need health insurance?
  • expect to undergo a procedure in hospital in the next two years - while state governments put extra funding in place to clear up the elective surgery backlog of public patients, you will still most likely get non-urgent elective surgery sooner if you have private health insurance. Especially considering that some non-urgent elective surgery now has been suspended in Victoria.
  • are of an age where you're more likely to use your hospital insurance.

If you decide to keep your health insurance, read our advice on how to save money on health insurance during coronavirus.

You should drop your health insurance if you have:

I dropped my health insurance but now I need it: if you dropped or downgraded your health insurance, but find you need cover again, contact your insurer. Usually, a 30-day cooling-off period applies, so if you upgrade or resume cover again within that period you may not have to serve waiting periods.

Can I use my private health insurance for elective surgery?

With news that from late April elective surgery for non-emergency health conditions has started again, you may be wondering how this affects your private health insurance.

Non-urgent elective surgery suspended in Victoria

Because of the outbreak in Victoria the state government has ordered public and private hospitals to defer non-urgent elective surgery. Only the most urgent surgeries - category 1 and category 2 will go ahead such as for life-threatening heart and trauma conditions.

Less urgent category 3 surgeries such as hip and knee replacements are suspended. So some patients who already had their surgery deferred or cancelled now have to deal with a further deferral.

No date has yet been set on when elective surgery will go back to full capacity. But Victoria Health Minister Jenny Mikakos has promised an elective surgery blitz to reduce blown-out waiting lists as soon as safe to do so.

Longer waiting lists for public patients

Elective surgery in public and private hospitals has been reintroduced on a state-by-state basis. For public hospitals, there are currently even longer than usual waiting lists as many people had their surgery cancelled or rescheduled and there are thousands of people who haven't had their surgery done within recommended time frames.

Shorter waiting list with private health but beware of extra costs

You might get non-urgent elective surgery done with shorter waiting times if you use your private health insurance. But be aware that this may come with out-of-pocket costs, if your surgeon charges more than the MBS fee, while public patients are treated for free.

Public patients in private hospitals

State governments have put extra funding in place to clear the backlog of public patients who need elective surgery. Hospitals in Queensland are now performing non-urgent surgery out of hours and in Queensland, Victoria and NSW some public patients are treated in private hospitals for free. 

Urgent cases will get preference, so if you're waiting for surgery and your condition is getting worse, call your specialist to see what can be done.

How to save on health insurance

Most private health insurance funds, including Medibank, Bupa, HCF and NIB have delayed premium increases until at least 1 October 2020, while HBF has cancelled them entirely. But private health insurance is still a significant household cost for many people and it's worth looking at how you can save.

Health funds may be more amenable to your requests to save money during the COVID-19 coronavirus. There's several ways you can save money during this period:

  • ask for a financial hardship waiver
  • ask for a discount
  • suspend your policy 
  • review your level of cover
  • drop your extras cover

Ask for a financial hardship premium waiver

Many funds have set funds aside for members in financial hardship so if, for example, you've lost your job, contact your fund and ask them to waive your premiums for a period. They may offer a suspension instead but try to insist to get a premium waiver. If your premium is waived you remain covered under your policy but you won't be covered while your policy is suspended.

Ask for a discount

Legally, your health insurer can give you up to a 12% discount (about six weeks off your annual premium). Only one health insurer we know of - Health Partners - have reduced premiums for all their members but many others may waive your premium for a few weeks if you give them a call and ask.

Suspend your policy

Your health insurer may offer to suspend your policy for a period such as one to three months. You won't be covered while your health insurance is suspended, but you can usually take up your cover again without having to serve waiting periods and it won't affect your Lifetime Health Cover loading.

Tax implications for suspended health insurance

If you earn more than $90,000 (single) or $180,000 (family, couple), dropping or suspending private hospital insurance will mean you pay extra tax.

What if I need to use my health insurance?

You can't use your health insurance policy while it's suspended, so it's better to get a policy waiver or discount than a policy suspension if you can.

If you unexpectedly need cover during a period of suspension talk to your fund as they may be able to lift your suspension. Different funds have different rules and some might be less flexible than others.

For example, if your policy suspension period is aligned with your JobSeeker payment start and end dates, then it might not be possible to end the suspension until your JobSeeker payments end.

Review your policy

Do you have the right cover for your needs? For example, do you need cover for pregnancy, IVF, obesity surgery, dialysis, hip/knee replacement and cataract surgery? These therapies are usually only covered with the most expensive Gold and Silver Plus policies. 

If you don't need cover for one or more of them, you may be able to downgrade to a cheaper policy, compare health insurance here.

If after looking at your options, you still want to drop your hospital cover, you can drop it for up to 1094 days (three years minus one day) in your lifetime without incurring a lifetime health cover loading penalty. 

If you drop your hospital cover you'll have to re-serve waiting periods if you take it up again. Waiting periods are up to 12 months for pre-existing conditions and pregnancy. 

Drop your extras cover

If you're currently paying for extras cover, think about the fact that you might not be able to use all of your extras benefits due to necessary social distancing to avoid infection with COVID-19.

Some funds now cover some extras services like psychology and physiotherapy provided over the phone or online (telehealth). But while restrictions on dental treatment have been eased, chiropractic sessions and other extras services will still be impacted by social-distancing measures.

If you don't want to drop your extras cover, but won't be using it in the next few weeks or months, ask your fund to suspend it. 

CHOICE tip: If you drop your extras cover and want to take it up later again, the waiting period for most services is usually 2 to 6 months. It can be higher, including 12 months for major dental work and orthodontics, and several years for services like hearing aids.

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact checking at CHOICE.