How to Choose the Best Health Insurance Plan for You
If you’re considering buying health insurance for the first time or want to switch policies, then this simple guide will help you find a health insurance plan suited to your requirements.
There is no one best health insurance plan. However, to help you choose a policy, you need to:
- Know your health insurance options and the policy types available to you.
- Consider your stage of life, health and what you can afford.
- Shop around and compare policies from major health insurance companies.
- Review the Standard Information Statement (SIS) of your top choices.
- Ask your doctor which health insurance plan they accept.
There are many details to consider when choosing a health fund. Start with this guide to make an informed decision.
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What are the types of private health insurance available in Australia?
In Australia, private heath insurance consists of three main categories:
3. Combined cover
Usually combines Hospital and Extras into one policy.
13 factors to consider before buying private health insurance
To help you choose the right health insurance plan for your requirements, you need to look attentively at:
- Your stage of life
- Your health
- The network of providers available
- What you can afford
- Out-of-pocket expenses
- Government rebates
- Exclusions and restrictions
- Benefit limits
- Waiting periods
- Pre-existing conditions
- Whether you travel a lot
- The Lifetime Health Cover (LHC) loading
- The Medicare Levy Surcharge (MLS)
1. Your stage of life
Choosing a health fund should largely depend on your age and family dynamic:
People coming to Australia on a student visa must purchase Overseas Student Health Cover (OSHC)
Young and single
If you are young and healthy chances are you don’t need much coverage, and a basic Hospital plan might suffice and help you avoid the Life Time Health Cover (LHC) loading.
Whether married or unmarried you might want to review your level of insurance and perhaps consider getting one policy from the same provider for easy policy management.
Planning to start a family
You might want to get cover while you're still planning to get pregnant because insurers generally require you to wait 12 months before you can claim pregnancy-related services.
Select health funds allow parents to add children to their policy at no extra cost.
A growing family
Private health insurers usually have different family packages available to suit your setup and requirements.
If you’re over the age of 65 you might want to consider upgrading to a more comprehensive policy that includes things like joint replacement surgeries, major dental and hearing aids.
2. Your health
If you frequently or continuously suffer specific health problems or have a family history of developing hereditary diseases, you might want to consider investing in a top/gold Hospital and Extras policy that have higher benefit limits, a chronic health management program and provides coverage for non-PBS pharmaceuticals.
3. Provider networks
Review the list of hospitals, doctors and specialists tied to a policy and try to find one that has your preferred hospital and health care providers listed. Ask your doctor which insurer networks they belong to before choosing a health insurance plan.
4. Your budget
Price is an important consideration when choosing health insurance. There’s no point in purchasing the best policy if you won’t be able to afford it in the long-run.
Which is why you should pay close attention to the overall cost of your plan, including the premiums, out-of-pocket expenses and co-payments:
- Premiums: In Australia, health insurance premiums usually increase every year on the 1st of April.
- Out-of-pocket expenses: The amount of money you’ll have to pay out of your own pocket for treatments and services is called a ‘gap’.
- Hospital excess: The maximum amount you have to pay if admitted to the hospital, regardless of the number of days you're in a hospital. Payable once per person, to a maximum of twice per year.
- Hospital co-payment: The maximum amount you agree to pay for each day that you are in the hospital, up to a specified amount. The payment is usually capped, so you'll never pay more than your yearly co-payment limit.
Higher excess and co-payments are designed to lower your health insurance premiums because you agree to make an out-of-pocket payment when admitted to hospital.
5. Gap cover arrangements
Gap Cover minimises or removes out-of-pocket expenses and is available from most private health funds. Essentially, it helps cover the gap between how much your policy will pay out and how much the doctor or specialist charges you when you go into hospital. However, not all doctors and specialists participate in these gap schemes, referred to as ‘no gap' or ‘known gap'. Review which doctors on the insurer’s provider network have agreed to these gap cover schemes.
6. Government rebates
If you pay private health insurance premiums, you may be eligible for Australian Government rebates, which means you’ll receive a percentage of your private health insurance premiums back. These rebates are based on your income threshold, age and the number of dependent children you have.
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7. Policy exclusions and restrictions
Always check the list of treatments and procedures covered under the policy’s Standard Information Statement (SIS) before making a final decision. However, such a list is rarely comprehensive, which is why it’s best to call the health fund directly to confirm what is and isn’t covered. Benefits and exclusions will vary from fund to fund.
8. Benefit limits
When comparing Extras policies review the limits attached to it:
- Annual limits: The benefit amount you can claim per year.
- Lifetime limits: The maximum amount the insurer is willing to pay per service.
- Sub-limits: The overall limit under a combined benefit, for example, chiro and physio are generally grouped together.
9. Waiting periods
Consider the amount of time you’ll have to wait before you’re able to claim a specific benefit. Your waiting period will generally depend on the insurer and the type of treatment you need. Usually, waiting periods will apply when:
- You joined or re-joined a health fund,
- Upgraded your cover, or
- Have a pre-existing condition.
10. Pre-existing conditions
Generally, private health funds will require you to wait 12 to 24 months before claiming on any treatments or medications related to a condition you had before joining. This includes claiming for pregnancy-related benefits.
11. Travel frequency
If you travel a lot, you need to make sure your health fund provides comprehensive ambulance cover, that includes both emergency and non-emergency ambulance services. Depending on where you travel to, you might want coverage both Australia-wide and internationally.
12. Lifetime Health Cover Loading (LHC)
If you’re over the age of 30 and have not yet purchased hospital cover on the 1st of July following your 31st birthday, you’ll have to pay a 2% loading fee on top of the base rate of your policy when you do decide to buy health insurance. The additional 2% will be added each year, up to a maximum of 70%. Once you have a loading, it can only be removed once you've had cover in place for 10 consecutive years.
13. Medicare Levy Surcharge
You’ll pay an additional 1% to 1.5% tax if you do not have private hospital cover and your annual salary is higher than $90,000 a year when you're single and over $180,000 as a couple or family (2018).
Where can you buy health insurance?
Australia has a very long list of private health insurance providers for you to choose from. You can decide to buy straight from the insurer or use a comparative website to help you shop around to gather and compare quotes.
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