What April 1, 2019 private health insurance changes mean for you

No more rebates for naturopathy, a new tier system and discounts for Millennials — here’s how private health insurance is changing from April 1 and why it’s time to check your policy.

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When the calendar flips to April 1 this year, many private health insurance customers will need to reconsider the way they approach their wellbeing.

For some, it may mean breaking ties with a trusted practitioner, as a number of natural therapies will be dropped from private health insurance general-treatment cover.

The change is part of wide-ranging government reforms aimed at making health insurance simpler and more affordable.

Private health insurance is changing again.

It comes after a National Health and Medical Research Council review found insufficient clinical evidence to support the effectiveness of 16 natural therapies: naturopathy, homoeopathy, aromatherapy, yoga, pilates, reflexology, kinesiology, tai chi, shiatsu, iridology, Western herbalism, Alexander technique, Rolfing, Bowen therapy, Buteyko and Feldenkrais.

By scrapping subsidies for these therapies, the government expects to remove costs to the system and ultimately reduce premium growth.

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So, what does this mean for consumers? You’ll still be able to access these therapies, but you’ll no longer be able to claim a rebate for them through your health insurance provider — the full cost will be on you.

It’s not all bad news: some natural therapies are staying, including acupuncture and acupressure, massage therapy or therapeutic touch, Chinese medicine, chiropractic, hypnotherapy and hypnosis, meditation and music therapy.

“Some natural therapies were not in the scope of the review. For example, practitioners whose professions are eligible for Australian Health Practitioner Regulation Agency (AHPRA) registration in Australia, such as physiotherapists or traditional Chinese-medicine practitioners,” a Department of Health spokesperson says.

Some natural health therapies will no longer be available under private health insurance.

Health-insurance companies will, however, be able to offer natural therapies as ‘inducements’ to customers.

“The scope of these inducements is at the discretion of the insurer and therefore could, for example, include vouchers to attend a natural-therapy session,” the spokesperson explains.

IS THE PRICE RIGHT?

With more than half the population covered for general (extras) treatment, the question is whether the decision to ditch natural therapies will make a real difference to premiums, which have grown 66 per cent in the past decade.

“I doubt that it’s going to change premiums,” says Karen Willis, professor in allied health research at La Trobe University.

“Natural therapies are not consistently in the top of extras benefits that are paid out. It might minimally reduce the burden, but they’re only covering the cost of the consultation, not the additional costs of products, which is where we generally find the expense in alternative and complementary therapies.”

There are some early signs, however, that the raft of reforms is paying off: while premiums are set to go up again on April 1, the 3.25 per cent average increase is the lowest price hike in 18 years.

Private health insurance premiums are set to increase.

But, according to Sarah Agar, head of campaigns and policy at consumer-advocacy group CHOICE, it’s the upcoming change in hospital cover categories — to basic, bronze, silver or gold tiers — which is likely to make private health insurance more confusing.

“The intention of introducing the four categories of basic, bronze, silver and gold from April 1 was to make it easier for people to choose a product with good value,” she says.

“But what we suspect, based on the information that we’ve looked at so far, is that these reforms are actually going to achieve the opposite.”

The problem, Agar explains, is that in addition to the four tiers, insurers will also be able to create ‘plus’ policies, adding treatments from higher tiers.

“That leads to a huge proliferation of potential policies and makes it a lot harder to know when you purchase a policy, what exactly you are going to be covered for,” she says.

Adding to the confusion is the way categories have been split across tiers.

“There are now 38 different categories that may be excluded under the policy that you purchase,” Agar says.

“For instance, eyes are covered under the new bronze category, but if you need an eyelid procedure, that’s considered plastic surgery, which is only covered under silver policies. And if you needed a cataract removed, remarkably, that isn’t considered ‘eye’ under the bronze policies.” Rather, it is a gold-tier option.

WHY IT PAYS TO SHOP AROUND

Some of the other changes coming include discounts for young people and an increase in maximum excess levels in exchange for lower premiums, both designed to attract new customers into the private-health system.

These are positives, Willis says, as long as people can afford to pay the excess if required and update their cover as their needs change.

“One of the things that we do know is that people tend not to change their policy as their life circumstances change. My prediction would be that a lot of people will get caught out by taking a cheaper policy when they’re younger and then not upgrading it when they’re more likely to need different services.”

People should consider if they need private health insurance to help with things such as paying for medication. Picture: iStock

If you’re considering buying health insurance, Agar suggests first clarifying whether or not you need it by taking the quiz at doineedhealthinsurance.com.au.

“Once you’ve decided that you need it, think about what’s the best value for you. Do you just need hospital? Do you think that you’re going to use extras if you buy them? It’s about making that sort of cost-benefit assessment while acknowledging it is very difficult to try to predict the future.”

Another top tip for consumers? You don’t need to combine hospital and extras cover.

“It’s often more affordable to purchase those two policies separately rather than bundling them,” Agar notes.

Whether you’re shopping around for a new policy or just entering the market, it’s vital that you read the fine print.

“I hate advising people to read the fine print, because it should be simpler than this,” Agar says.

“But the advice for consumers is read your policy really carefully.”

4 INSURANCE MYTHS BUSTED!

1. YOU WON’T BE OUT OF POCKET

Some surgeons charge more than your fund will cover or you may not be covered for certain tests. Check with your insurer if they have preferred providers and always talk costs with your treatment team in advance to avoid bill shock.

2. YOU CAN LET YOUR POLICY LAPSE

“Some people believe that you can let your policy lapse for a while and then pick it back up — they don’t realise this will put you on to new waiting periods in a lot of cases,” Agar explains.

3. YOU NEED EXTRAS COVER FOR TAX BENEFITS

If you’re buying health insurance to avoid the Medicare-levy surcharge, you don’t have to purchase a combined policy.

4. YOU’RE LOCKED IN

You can actually switch funds at any time without paying an exit fee. And you won’t have to re-serve your waiting periods with your new insurer unless you upgrade your cover.