When choosing, the more extensive the health insurance cover, the greater the cost (contribution rate) within each fund.
When choosing your private health insurance, it is important to make sure it suits your particular health needs, as well as your budget.
It is, therefore, important that you check the product descriptions to make sure they meet your current needs.
Health Insurance Terms
When you take out health insurance you are purchasing a product (a health insurance policy) from a private health insurance organisation (a fund).
The extent of insurance cover you obtain depends upon the health insurance product you choose. The money you pay to purchase this insurance cover is called a health insurance premium. The money the fund pays for treatment you receive is called ‘benefits’.
Types of Insurance
There are two types of private health insurance cover available: hospital cover; and supplementary (or extras) cover.
Hospital insurance covers all or some of the costs of hospital treatment as a private patient including doctor’s charges and hospital accommodation. The level of insurance cover you receive depends upon the product you choose.
Sometimes also referred to as “General Treatment” “Supplementary” “Ancillary” cover helps with the cost of services such as physiotherapy, dental and optical treatment that are not covered by Medicare, nor associated with a hospital admission.
Some funds offer packaged policies that cover both hospital and extras services, or you may select a combination of products to best suit your needs. At HHI Health Benefits we offer individual hospital products and an extras product individually or you can combine the hospital with the extra product and have a combination product to meet both aspects of your health care needs at various level and contribution rates.
It is possible at any time to change the type of health insurance product you have to meet your changing needs. For example, you can add extras cover at any time or a hospital cover at any time to change the level of cover, for example, by upgrading to a product with a higher level of cover. Although it is usual, it is not necessary for you to hold your hospital cover and ancillary cover with the same fund.
You become a member of a health insurance fund when you purchase a health insurance product. There are four possible categories of health insurance membership. Single membership provides cover only for the one person named on the membership application.
Couples Membership provides cover for the member and the member’s nominated partner. Family Membership provides cover for the member, the member’s nominated partner and/or dependants.
When you join a health fund or upgrade your existing level of hospital cover, you may have to wait some time before you can claim benefits for some services. This is called a waiting period. Waiting periods that apply to hospital cover include:
- 12 months for treatment related to a pre-existing condition;
- 12 months for obstetrics (pregnancy) services; and
- 2 months for all other hospital treatments except accidents.
- CHILD AGE 21 YEARS – When a child reaches the age of 21 years, provided he/she is not a Student Dependant, and is not covered by one of the Hospital Products, the child must join as a separate Primary Member to obtain cover. Providing that such a membership application is completed within one month of the 21st birthday, Benefits shall be available without Waiting Periods. However, if upon reaching 21 years, and the Dependant is covered by one of the Hospital products, the Member may, if they desire, continue to cover the Dependant until their 25th birthday by the payment of an additional Premium as defined by the “Dependant Extension Cover”.
- This Dependant Extension Cover is only available on the Gold Level of Hospital Cover. All other level of cover the Dependant will need to open a new independent cover of their own.
When you decide to take out or upgrade your hospital cover you may already be ill. You have what is referred to as a pre-existing condition or ailment.
A pre-existing condition means an illness or condition, the signs or symptoms of which existed anytime in the 6 months before the day on which you joined or upgraded to a higher level of hospital cover. Whether an ailment is ’pre-existing’ is determined by a medical practitioner appointed by the health fund. It is not necessary for you or your doctor to have diagnosed the condition – signs and symptoms only have to be in existence. In making this judgement, however, the fund appointed practitioner must also consider the opinion of your own medical practitioner.
This means if you have less than 12 months membership and you need hospital treatment, you should confirm with your fund whether or not the pre-existing condition waiting period applies to you. It is important you confirm your eligibility for benefits before you are admitted to hospital. Otherwise if you proceed with your admission and your condition is subsequently determined to be pre-existing you will be required to pay all outstanding hospital and medical charges.
Funds will require you to obtain facts about your illness from all your treating practitioners. So if you have less than 12 months membership on your current hospital policy, contact your fund as soon as you know you have to go to hospital.
The maximum 12 months obstetric waiting period applies to costs associated with the actual birth of a child including antenatal care, the management of labour and delivery and post-partum care (care post delivery).
A maximum 2 month waiting period may be applied to all other pregnancy or gynaecological related services provided in a hospital or day hospital facility. You should be aware that in nearly all circumstances assisted reproductive services, sterilisation and reversal of sterilisation is considered to be pre-existing before you took out the product and a 12 month waiting period will apply. Make sure you clarify your eligibility for these treatments with your health fund prior to admission.
Extras (Ancillary,Supplementary,General Treatment) cover
Waiting periods for extras services are not regulated by the Government and may vary between products and between health funds. There are usually different waiting periods for different extras services.
You should check the waiting periods on services carefully when choosing your health insurance fund product and you should also check the limits that apply to each person on the membership.
Medical Services Outside Of Hospital
Under Commonwealth legislation health funds cannot pay for costs associated with visiting your general practitioner or a specialist outside of hospital. In these circumstances, Medicare will cover 85% of the Government set fee for these services.
If the medical practitioner bulk bills he/she will only charge the amount Medicare covers, and you will not have to pay any medical gap charges. If, however, the medical practitioner charges above the amount Medicare covers, you will have to pay the gap between the Medicare reimbursement and the doctor’s fee.
Hospital Cover – what does it mean to be a private patient?
Being a private patient in a public hospital gives you choice of doctor. Depending on your illness or condition and your needs, this may or may not be the same doctor you would have been allocated by the hospital as a public patient.
Being a private patient in a private hospital or day hospital facility gives you a choice of doctor and hospital, as well as access to hospital services at a time that may better suit your needs.
Suspension of membership for overseas travel
You can apply for ‘Suspension of Membership’ if you are travelling overseas and will be out of Australia for a continuous period of not less than 2 months to a maximum of 24 months, This will allow you to freeze cover and not have to pay contributions for that period outside of Australia provided all persons listed on that membership will also be travelling for the same period. Your membership will be resumed to the same level of cover prior to your date of travel except for any condition or ailments that arise during the period of suspension which will be treated as pre-existing conditions and the appropriate waiting period apply. Please understand that No Benefit will be considered if the service was incurred during the suspended period.
With your request to suspend membership for travel purposes, you must submit supporting documentation for all persons covered on your membership prior to your departure. Documentation includes itineraries and e-tickets. If no evidence of your travel for the period of suspension requested is received, no suspension will be applied to your membership.
On returning to Australia you must reinstate your membership within 1 month and pay commencing from the date of return, and supply evidence of the date you returned to Australia. If no evidence is received your suspension will be cancelled and may have Lifetime Health Cover implications.
Please understand that any suspended cover may affect your Medicare Levy Surcharge, please contact the Australian Taxation Office (ato.gov.au) for details.
Gap payments for extra services
Gap payments can also occur if the fee charged by your service provider such as dentist, physiotherapist or optician, is greater than the benefit paid by your fund for that service. The level of benefit health funds pay for extras services is at the discretion of health funds and is not regulated by the Government.
Some health funds impose annual limits on the benefits payable for some ancillary services. Some health funds also have agreements with extras service providers to reduce or eliminate out of pocket expenses.
These agreements with hospitals, doctors and extras service providers may change over time. HHI Health Benefits members can check their benefits or limits associated with their level of cover by referring to the product information.
Things to check before having treatment
Before agreeing to either in-hospital treatment or receiving treatment for ancillary services you should:
- Check to confirm the level of benefits payable and whether any waiting periods apply – in particular whether or not the pre-existing ailment waiting period will apply. You should also check whether there is an agreement between the your health fund and the hospital.
- Speak to your doctor or ancillary service provider to find out if they have arrangements with your health fund that minimise the out-of-pocket expenses you have to pay. This will help to ensure that you don’t receive any unexpected bills after your treatment. You should also check this detail with your health fund. In cases such as an emergency admission, it may not be possible to discuss fees prior to treatment. Where this occurs the hospital, health fund and doctors should provide you with this information as soon as possible after treatment.
Transferring between funds
If you have hospital cover, you can transfer between funds at the same or a lower level of cover, without serving additional waiting periods. This is sometimes called portability between health funds. The fund you transfer to must give you credit for any waiting periods already served. You may have to serve additional waiting periods if you upgrade your level of cover even if it is with your current fund.
You should also be aware that the fund to which you transfer may not provide exactly the same hospital benefit entitlements as the one from which you have transferred. Check the details with the funds involved before transferring.
Health funds are not required by law to recognise waiting periods served for ancillary services, but many funds do including HHI Health Benefits Fund. Any claims made with your previous fund for ancillary services may be taken into account by your new fund. Check the details with the funds involved before transferring.
Features of hospital cover that may reduce your insurance premium
You can reduce the cost of health insurance by choosing a product that has some or all of the following features:
- An Excess;
- A Co-payment; (HHI do not have Co-payments)
- Benefit exclusions for certain treatments;
- Restricted benefits; and/or
- Benefit limitation periods
Each of these features is explained below. It should be noted that, in general, choosing a product where the premium has been reduced through an excess, co-payment, etc, would lead to a lowering of benefit levels or an increase in what you pay for treatment.
HHI Health Benefits does not charge co-payments or an excess so the levels of benefits you receive will be the highest we offer. Make sure you read and understand what is covered and what is not. If you are unsure of any of the terms or exact treatments that are excluded or pay limited benefits, ask your fund.
An excess is an amount of money you pay towards the cost of hospital treatment, regardless of the number of days of hospitalisation. For example, Mary and Tom and their children, Mark and Samantha have a family membership with an excess of $500. This means that they are charged a lower premium for their hospital insurance because they have agreed to pay the first $500 of hospital charges if they require hospital care.
With some policies, this excess is only charged once a year, regardless of the number of hospital admissions required throughout the year by the people covered by the product. Under other excess policies, the excess may apply on each hospital admission in the year. When choosing a health insurance product make sure you understand how these excess payments apply.
If you are transferring to HHI Health Benefits from a cover at another Fund which had an excess/co-payment, and it is deemed to be a pre-existing condition, that excess or co-payment will apply for that hospitalisation for the indicated waiting periods. If it is not deemed a pre-existing then an excess or co-payment may not be payable.
Some lower cost health insurance products specify that certain hospital treatments are not covered and no benefits are payable. These are called exclusion products.
If you choose an exclusion product, you need to be careful that you do not exclude treatments that you may need in the future. The need for some treatments that are excluded, e.g., for coronary disease, is not always easy to predict.
Some health insurance products allow you to choose to be covered for only a minimum level of benefits for certain treatments in return for a lower premium. Some restricted benefits products sometimes referred to as ‘basic benefits’, only entitle you to basic benefits for accommodation but do not cover any theatre fees, intensive care unit, coronary care unit, labour ward or same day theatre fees.
Other restricted benefits products, pay minimum accommodation benefits and also pay some but not all, of the costs for theatre fees, intensive care unit, coronary care unit, labour ward or same day theatre fees. You should check with your health fund to ensure that you fully understand your benefit entitlements if you choose a restricted benefits product.
You should also be aware that there is generally a significant price difference for hospital accommodation in a public hospital compared with a private hospital.
Federal government rebate
The Federal Government rebate makes private health insurance more affordable for eligible Members by reducing your private health cover premiums. The scheme commenced 1 January 1999 and was revised 1 April 2005 and introduced the Seniors Rebate scheme now giving three levels of rebate.
The rebate levels are:
- Federal Government rebate off your premium for members aged 64 or under
- and additional percentage rebate off your premium for members aged 65 – 69
- and a further additional percentage above 65 – 69 rebate off your premium for members aged 70 or over.
A membership is entitled to the Federal Government rebate as soon as one person covered by the membership turns 65 and then again when they turn 70.
There are three ways to claim the Federal Government rebate
- As a premium discount thus reducing your upfront cost by completing the ‘Application to receive Federal Government Rebate Form’;
- Claim the rebate from a Medicare Office using the receipts we will provide.
- Claim the rebate in your tax return using the statement we will provide.
Gap payments for hospital cover
A gap payment is the difference between the fee charged by the hospital or doctor who treats you in hospital and the benefit paid by your health fund.
Gap payments for hospital treatment can occur for the following 3 reasons:
- Product choice – Gap payments will arise if you have chosen a hospital product with an excess, a co-payment, or an exclusion or restricted benefits for certain procedures.
- Gap payments – hospital accommodation – Some hospitals have an agreement with individual health funds to charge an agreed amount for treatment so that you will have either no out-of-pocket expenses for hospital or medical related services or you will know before-hand what costs you will bear. Gap payments for hospital accommodation can also arise if you choose to be treated in a hospital that does not have an agreement with your health fund. Wherever possible, you should always contact your fund before hospitalisation to confirm the level of benefits that will be paid.
- Gap payments – doctor’s fees for in-hospital services Gap payments may also arise for medical services received in hospital. When you receive medical treatment in hospital as a private patient, Medicare pays 75 per cent of the Commonwealth Medicare Benefits Schedule (MBS) fee for the doctor’s service and your health fund pays the remaining 25 per cent of the MBS fee. If your doctor charges above the MBS fee, you may have to pay the difference between the MBS schedule fee and the doctor’s fee.
Your health fund may be able to cover the gap, in full or in part, that is above the MBS if:
- there is an agreement between your fund, hospital and/or doctor; or
- the fund has a gap cover scheme.
Where there is an agreement or scheme you will have either no out-of-pocket expenses or you are entitled to be given an estimate of the costs you will have to pay in advance. You should ask your doctor for an estimate of any costs you will have to pay, even when there is no scheme or agreement.
All funds now offer gap benefits as part of most hospital insurance products. In most cases these benefits have been added to existing hospital products – so you may already be covered for all or part of the medical fee gap. HHI Health benefits has gap cover on all its hospital component products. This is aimed at eliminating any out of pocket expenses to our members. However, this is not always the case and it is important that members obtain a quote from their practitioners, including other practitioners involved such as anaesthetists or assisting surgeons to determine prior to any procedure if there will be an out of pocket expense.
Lifetime Health Cover
Under Lifetime Health Cover, health funds are required to charge people who were not members of a hospital table prior to 1 July 2000, 2% extra on top of normal premiums for every year they are aged over 30 when they first take out hospital cover.
This means that a person who does not take out health insurance until they are 35 will pay 10% more for their health insurance than they would have had they joined before they turned 31. This higher premium will always apply for 10 continuous years when the LHC will revert to no penalty. Contact us for more details.
People born before 1 July 1934 are exempt from Lifetime Health Cover and can take out hospital cover at any time and not pay a premium loading.
All hospital policies, except overseas visitor’s cover, offered by registered health funds meet the Lifetime Health Cover requirements. More information on Lifetime Health Cover is available from the Department of Health and Aged Care website at http:/www.health.gov.au.
Where high-income earners do not take out private health insurance, they are charged an additional 1% on top of the Medicare Levy. If you are a high-income earner and seek to avoid the additional 1% Surcharge you need to make sure you have purchased hospital cover with an excess less than or equal to $500 per annum for single contributors or $1,000 per annum for couples and families.
More information on the Medicare Levy Surcharge is available from the Department of Health and Aged Care website at http://www.health.gov.au or the Australian Taxation Office at www.ato.gov.au or ATO special helpline 132861.
The LEVEL of cover you choose determines the BENEFITS you receive. The higher the cover, the higher the COST of the premium within each fund. WAITING PERIODS will have to be served BEFORE you are entitled to benefits.
BENEFITS can be INCREASED by having treatment with a service provider, doctor or hospital that has an AGREEMENT with your fund. BENEFITS can be LIMITED by choosing a product which has:
. AN EXCESS;
- a co-payment
- excluded benefits
- restricted cover for certain conditions
- benefit limitations periods; and
- annual limits on the total benefits payable for some
- ancillary services
If you have a problem with your private health insurance you should:
- Contact the fund directly.
- If you are unable to reach a satisfactory agreement with your fund after written communication, contact the office of the Private Health Insurance Ombudsman. The Ombudsman is independent of the health funds and the Government and is able to provide free information and assistance to resolve complaints.
- The Ombudsman’s office can be reached on the Complaint Hotline 1300 362 072. Alternatively you can visit the Ombudsman Website: www.ombudsman.gov.au and www.privatehealth.gov.au
More detailed information is available from Hunter Health Insurance – Just call us on (02) 4990 1385 to talk to one of our helpful staff. We can also post a more detailed brochure out to you with full details of all of our products including premiums.