Health insurance reforms to bring more clarity to coverage

With only a month to go before the annual hike in private health insurance premiums, many people are weighing up whether the ever-increasing costs for services are worth the financial pain.

It comes as no surprise that three out of four private health insurance members struggle to meet the cost, sighting that the premiums are one of the biggest strains on the family budget.

Private health insurance premiums will rise from between 1.64 per cent to 5.91 per cent from April 1.Credit: Louie Douvis

For Marilyn and Bob, a retired couple, the premiums make up almost 10 per cent of their annual income, making it “a tough decision every year whether to continue”.

A common frustration is also not fully understanding what they are covered for. They are not alone.

More than half the population have private health insurance but many remain confused on what they get for the thousands of dollars they pay in premiums each year.

This year, health insurance standards are getting an overhaul, with the government unveiling a series of reforms from April 1. Here's a brief summary.

Four tiers of cover

Private hospital cover will be classified in four easy-to-understand tiers — Gold, Silver, Bronze or Basic.

What is covered in these tiers will be based on new minimum standard clinical categories.

Each level will have a list of what is and is not included. For example, dental surgery will be covered under Gold and Silver but not for Bronze or Basic.

Ability to raise your excess

If you are wanting to save some money on your premiums, insurers will now be able to offer the choice to increase your excess to lower your cost.

The maximum excess for a policy is being raised from $500 to $750 for individuals and from $1,000 to $1,500 for couples and family policies.

Discounts for young members

For young people wanting to obtain insurance but have been deterred by the high cost, insurers can now offer people aged 18 to 29 discounts of up to 10 per cent off their private hospital premiums.

The allowed discounts vary and generally depend on how old you are when you purchase a policy that offers discounts, or your age when your insurer introduces the discounts to your existing policy.

The discount will gradually reduce as you age. For 26 years, it's 8 per cent, 27 years (6 per cent), 28 years (4 per cent) and 29 years (2 per cent).

Travel benefits

Among the changes are travel and accommodation benefits for people who have to travel long distances for hospital treatment.

Mental health access

There will also be improved access to mental health treatment by allowing people to upgrade their hospital cover without re-serving a waiting period.

Benefits for women

Women will benefit from guaranteed cover in Bronze tiers for gynaecological services, ovarian and breast cancer treatment and breast reconstruction.

Pregnancy and assisted reproductive services — such as IVF — are only minimum requirements for the Gold tier.

Complaints

The Private Health Insurance Ombudsman will now have powers to investigate complaints and other issues.

While these new changes will take the spotlight over the next few weeks, one thing doesn’t change. There will be another broad hike in premiums.

The good news is that this year’s increase is the smallest in almost 10 years.

The price hikes will range from 1.64 per cent to 5.91 per cent, with an average premium increase of 3.25 per cent

While the rises do not come as a surprise, the new changes to tiers, excesses and discounts might and you should keep an eye out for correspondence from your insurer over the coming weeks to ensure you understand the impact on your personal situation.

Olivia Maragna is the co-founder of Retire Financial Services.