On April 1, a swathe of government reforms are set to hit private health insurance. These changes will be the biggest shake up to the industry in over a decade. So, what do current and prospective policy holders need to know?
Private health insurance. No doubt the phrase often has you scratching your head wondering whether it’s worth the money and how it actually works.
Well, you’re not alone. In fact, most Aussies feel confused about private health insurance both in terms of price and policy. The good news is that the new government reforms will aim to make private health insurance easier to understand and more affordable for more Aussies.
Here are the main changes you need to know about – whether you’re looking to change providers or get private health insurance for the first tine.
Your health policy premium is about to increase
On April 1, private health insurance premiums will rise by an average of 3.25% (which is about $135 a year more for an average family policy and $62 more for the average single).
Premiums have risen on average by over 26% in the past five years so if you haven’t reviewed you policy in a while, now is the time to check.
Introduction of Gold/Silver/Bronze/Basic product tiers
The biggest change to private health insurance as part of the Government reforms 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 or 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.
Long-term, this change will hopefully end confusion for policy holders as you’ll now know exactly what’s included in your policy and what isn’t. The good news is there shouldn’t be any more unexpected surprises upon hospital admissions!
But in the short term some customers will be impacted by detrimental changes to their policy which means they will no longer be covered for things they were previously and may have to upgrade to a higher level of cover.
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. Your excess is to amount you pay if you’re admitted to hospital in exchange for lower premiums.
The new changes will mean that 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.
Discounts for under 30s
Young Aussies could benefit from the changes with under 30s set to receive discounts of up to 10% 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% for each year they are aged under 30 when they first purchase hospital cover up to a maximum discount of 10%. This means the younger you are when you first take out hospital cover, the greater your potential discount.
Removal on natural therapies
This change is a may come as a disappointment 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.
Travel and accommodation benefits
Policy holders living in Australia’s rural and regional areas will now receive 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 you need to do?
Now that you’re across the upcoming changes, it’s more important than ever to check you’re still on the right policy for the right price before 1 April. A private health insurance comparison service can 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 onward.