Jessica Petterd is a spokeswoman for iSelect.
When you think about private health insurance you’re no doubt also thinking ‘expensive’ or ‘confusing’. You’re not alone. In fact, many Aussies struggle to understand their policy or to justify the cost.
The good news is that from April 1 2019, the Government will be making major changes to private health insurance to help make it less confusing and hopefully more affordable. As a result, many policies are likely to change.
So, what is exactly changing?
On April 1, private health insurance premiums will rise by an average of 3.25 per cent (which is about $135 a year more for an average family policy and $62 more for the average single). But April 1 is also the date that many of the Government’s reforms come into effect. Here is what you need to know about the upcoming changes.
1. Gold/Silver/Bronze/Basic product tiers
The biggest change will be the introduction of product tiers which are designed to make it easier for you to compare hospital products. Funds will be required to categorise all hospital policies as either Gold, Silver, Bronze and Basic.
Under this new system there are minimum standards for hospital services and treatments to be covered under each tier and all policies within a tier must meet that minimum standard.
This means all products in the same product tier will cover the same services and treatments as all other policies in that tier. So for example, currently insurers can use any term they wish relating to the birth of a child i.e. obstetrics, birth related services, pregnancy. This makes it confusing to understand the difference. The new reforms will have one set category the fund must use for each benefit which will be ‘Pregnancy and Birth’.
2. Higher excesses in exchange for lower premiums
From April 1, you’ll have the option to increase your maximum excess in exchange for cheaper premiums, which will reduce the amount you pay each month.
The maximum excess will increase from $500 to $750 for singles and for families from $1000 to $1500. Opting for a higher excess could save up to $200 a year on a single policy and $350 a year for families. Extra cash in your pocket anyone?
3. Discounts for under 30s
If you’re under 30, you’re in luck. The new changes will mean that you may be able to benefit from discounts of up to 10 per cent discount on hospital cover – saving up to $200 a year on a $2000 policy.
18-29 year olds will be eligible to receive a 2 per cent for each year they are aged under 30 when they first purchase hospital cover up to a maximum discount of 10 per cent. This means the younger you are when you first take out hospital cover, the greater your potential discount.
4. Removal on natural therapies
While many of the upcoming changes may mean less head scratching and more money in your pocket, this change may be disappointing for those who love their natural therapies. Some (but not all!) natural therapies will no longer be covered under extras policies including Bowen therapy, naturopathy and yoga. You can view the full list of therapies no longer covered here.
The good news is that remedial massage, Chinese medicine, myotherapy and acupuncture can still be included within extras policies. Pilates that’s provided by a registered physiotherapist may still be claimable under your physiotherapy limits however this could vary between funds.
5. Travel and accommodation benefits
If you live in rural or regional areas, the changes will mean that you’ll be able to access improved travel and accommodation benefits should you need to travel to the city for treatment.
Insurers will now be able to offer travel and accommodation benefits as part of hospital policies which will hopefully improve the value of private cover for Aussies living outside of metropolitan areas.
So, what do I need to do?
While in the long run these changes will make it much easier for you to compare your private health insurance, in the short term you’ll most likely be feeling confused by how your policy may be changing in terms of cover and price
Increased premiums and possible changes to your policy means it’s even more important than ever to check your policy before 1 April to make sure you are still getting value for money.
A private health insurance comparison service like iSelect can do the hard work for you. Their highly trained advisers can cut through the confusion, explain how your policy is changing and compare it to other options to make sure you are still on the right level of cover from April onwards.