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Should You Switch Health Insurance Funds?

Anneke Van Aswegen Updated: 11 May 2020
Types of Health Insurance

With health insurance premiums increasing every year on the 1st of April, you might be considering cancelling your policy.

However, this might be an excellent opportunity for you to review your health cover and decide if it’s still providing you and your family with value at this stage of your life. Maybe, you’re planning to start a family, or nearing retirement and need a different type of policy and would like to know what other companies have to offer.

You are not bound by a contract when you purchase health insurance, meaning you’re free to switch health funds at any time.

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Switching health insurance

Switching private health insurers is reasonably straightforward, with most companies helping you during the transition. However, the decision to change companies should depend on your requirements, such as your age, health, family dynamic and budget. Before you switch, you might want to compare similar policy types from a variety of health insurance companies to determine which one provides the best level of cover at the lowest price.

Why people change health funds

Generally, Australians either cancel or downgrade their health plan or switch companies because of:

Will health insurance waiting periods be waived when you switch?

You can generally switch health insurance with no waiting period if the policy you’re changing to offers the same or a lower level and type of coverage as your current policy. If you have not yet completed the required waiting period before switching, your new fund will generally give you continuity for the waiting periods you have already served.

However, should your new policy include higher or different benefits than your previous plan, you will have to wait the specified amount of time before you can claim those benefits.

Example 1: Pregnant and changing health funds

If you want to switch from a Silver Hospital plan to a Gold Hospital policy because you want pregnancy and birth-related services, you’ll have to serve the mandatory 12-month waiting period that is generally required.

On the other hand, should you have already served part of your waiting period and want to switch, you’ll only be required to serve the remainder of your waiting period before you’ll be able to claim.

Example 2: Changing to a health company with different benefit limits

Should you change health funds where your previous provider offered a $250 annual limit on dental, while your new health insurance provider that has a $500 yearly limit, then you’ll have to serve the required waiting period before you can claim on the additional $250 that was not available from your previous health fund.

What to consider before switching private health insurers

  1. Whether your needs have changed: Consider the stage of life you’re in now and the type of health services and products you might require. For example, seniors might want to make sure the health fund they’re switching to has a policy that includes coverage for hip and knee replacements.
  2. What the plan covers: Make sure your new fund provides the right type of coverage for your requirements as you’ve determined per your needs-analysis.
  3. The premium: Can you afford to pay the premium in the long-term. You might want to review the health fund’s history of yearly increases to get an indication of their continued affordability.
  4. Out-of-pocket expenses: Consider what services are not fully covered, for example, you might have had full coverage for joint reconstruction, but with the new fund this service is only partially covered – restricted.
  5. Annual limits: Annual limits differ between health funds. Get clarity on the benefit percentage and yearly limits of services you know you’ll claim on.
  6. Provider networks: Check if your preferred dentist, doctor and specialist are covered under the new fund’s network of providers.
  7. Loyalty bonuses: Select companies rewards loyal customers with bonuses or discounts. Make sure you’re not worse off when transferring to a new company.
  8. Customer reviews: Have a look at what other people have to say about their experience with the health fund you’re reviewing. Ideally, you want to find an insurer that is liked by their customers.

6 Steps to changing health insurance companies

Frequently asked questions

  • How can I change my health insurance plan?

    If you decide to stay with your current provider but want to downgrade or upgrade your policy, you can generally go to their online membership portal or call them directly and request that they change your plan. If you switch to a higher level of cover or a policy with different benefits, you usually have to serve a waiting period before you can claim those benefits.
  • Can you change your health fund at any time?

    Yes, you are not bound by a contract and don’t have to remain with a health fund that you can’t afford or that no longer provides what you with value. Your new health insurer will usually assist you with the switching process. Your job is to make sure you know what you want from a new health fund and compare quotes from Australia’s most significant health insurance companies before deciding.
  • Will switching funds affect my payment of the Medicare levy surcharge (MLS)?

    As long as your new health plan includes a sufficient Hospital policy, you do not have to pay the MLS fee.
  • When should I change my health insurance plan?

    The best time to change your health insurance plan is before the 1st of April, which is when health premiums increase. You might also consider switching when you’ve experienced a significant life change, for example, got married, started a family or retire.
  • How do I cancel my health insurance?

    If you want to cancel your private health insurance policy, you will generally need to:
    1. Be up to date with your premiums
    2. Call, email or log onto the online membership portal and request a cancellation.
    3. Make sure you receive your clearance certificate within 14 days of cancellation.
  • Can I suspend my health insurance policy?

    Yes, you can usually put your health insurance policy on hold if you’re experiencing financial strain or travelling overseas for longer than 2 months. Generally, while your policy is suspended no premiums are payable, and you won’t be able to claim on any benefits.
  • Do I have to have Hospital cover and Extras from the same provider?

    No, you can choose to have Hospital cover with one insurer and Extras from another. Some people prefer this option as a way to find better value or save on premiums. However, it might require some more admin from your part. Make sure you know precisely which fund covers which policy type and keep records of your benefits, co-payments and annual limits.

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