Here’s how to get the most from your health insurance
We asked insurers and consumer advocates how you can get the best value from your private health cover ahead of looming price rises. Here’s what they said.
As private health funds prepare to increase premiums on April 1, we take a look at ways to make your insurance work for you. After all, national data shows 14.8 million people have health insurance with extras cover in Australia. That’s despite a recent trend to downgrade policies as the cost of living and rising premiums bite.
So, we asked consumer advocates and insurers how to make the most of your policy. To start, health insurance comes in two parts: hospital cover and extras. To avoid paying the Medicare levy surcharge, higher-income earners only need to ensure they have hospital cover. But extras cover can provide a safety net of sorts for some additional health services such as dental, optical and physiotherapy. However, which and how much of any treatment is covered depends on each policy and service provider.
Consumers Health Forum of Australia chief executive Elizabeth Deveny says that’s something people are not always aware of until they get a bill at the end of their treatment.
“People get extras cover but they don’t realise it won’t pay all of the costs or that they’ve got limits,” she says. “Same for hospital cover, people think it will pay for all of it. They also think that private health insurance covers all private care and it doesn’t. It doesn’t pay for the visit to your specialist – it doesn’t cover a lot of things.”
There also is no national standard for extras cover, so understanding each policy takes time and research. While insurers do need government approval to lift the average cost of their premiums, certain policies still rise above that.
“Top level gold hospital cover has increased by a significant amount of money over the last few years, we’ve found that increased by 45 per cent on average over four years, which is a hell of a lot more than that average overall increase,” consumer group Choice’s insurance expert Jodi Bird says. “And that’s a lot of money to be paying, especially if you’re not going to be using those services.”
Sheena Jack is chief executive of insurer HCF, Australia’s largest not-for-profit health fund. “At the end of the day our health is the most important thing to us,” she says.
That’s not just her being nice. It makes economic sense, too; with the exception of an emergency, healthier fund members are less likely to require expensive medical interventions that need long and complicated hospital visits. So, fund operators want you to make positive lifestyle choices and be more proactive about your health so you are likelier to live well.
“It’s really in our interest to help our members get well, stay well, keep you well, because that’s better for them and it’s better for us.”
We asked Jack, Bird, Deveny and Medibank Private chief customer officer Milosh Milisavljevic for their tips on how people can make the most of their health insurance extras policies. These are their top tips, though it is important to consider your own circumstances.
Pick the right policy
This may seem like a no-brainer but reviewing your policy – properly – each year can save you. This goes beyond just shopping around based on cost. Our experts advise to start by reviewing what claims you made in the previous 12 months: did you reach your claims limit early in the year or did you make enough claims to justify your level of cover?
“Outside of hospitals, this is where a lot of people are paying premiums where they’re not actually getting a lot back,” Bird says.
“They’re paying out a lot more in premiums than what they might have actually just paid out to those providers if they didn’t have insurance at all. So, you really need to have a look at … can you downgrade the cover to what you’re actually using it for? Or indeed, if you really need to use it at all.”
Jack agrees it is important for people to decide what services they want access to. But she says extras can provide people with important preventive care and suggests having it can help you be more proactive.
“Don’t just let it set and forget. That’s a problem because then, if you haven’t kept it up to date with what your needs are, you can become very dissatisfied when you find out that actually it’s no longer fit for your needs,” she says.
“Ask what are the services that are going to really help me manage my health, stay healthy, manage chronic disease. Dental is a really important thing for people to make sure they’re actually going to the dentist and having those check-ups, because we know that there’s a very direct link between your dental health and your general health.
“We are doing a campaign at the moment where we’ve looked at our members that haven’t been to the dentist for the last two years and are actually reaching out to them and encouraging them to go to the dentist to use that coverage.”
According to NSW Health, having a healthy mouth, teeth and gums may reduce your risk of chronic diseases including diabetes, heart disease, stroke and respiratory conditions.
“Poor oral health increases the risk of a bacterial infection in the blood stream, which can affect the heart valves,” NSW Health advises. “Bacteria in the mouth can increase the risk of a heart attack and can narrow blood vessels.”
Dental is typically expensive and public waiting lists can be long, so understand your policy and what is covered. Some funds have general dental and major dental as separate areas of coverage.
The other large out-of-pocket expense can be optical; does your policy cover your needs or do you have a policy that includes optical but you don’t use it?
Milisavljevic says a lot of insurers now have apps that can provide faster access to your account and let you see when and where you’re making claims.
“To get the most out of your extras, it’s important to remember that your extras limits renew every year and the date is different at each health fund,” he says. “At Medibank, our extras limits renew at the start of each year, whereas for ahm it’s July.”
If you are considering taking out insurance with extras cover for the first time or looking to switch policies, Deveny recommends collecting allied healthcare receipts for even just a few months to understand what you’re likely to spend your money on. Also, if you live in a regional or rural area, check you can actually use your insurance nearby. This also applies to hospitals.
When it comes to extras, you generally have the flexibility to choose what will work best for you.
“Put a note in your diary, in your phone or on your calendar that says ‘check health insurance’,” Deveny says. “Did the insurance work well for what you needed or not? Did you use any extras? Do you think you’re likely to? Is it worth going and checking and doing that research through privatehealth.gov.au, again to see if there’s a better option for me?”
Mind the gap
A growing practice with insurers is to offer their own providers for services including for dental or optical. Electing to go to one of these providers often means you won’t be charged a gap fee. Or, if you are, it may be lower than if you picked your own private provider.
“We all know that it’s important to see the dentist twice a year for a check-up, not just for your oral health but your overall health,” Milisavljevic says. “At Medibank we also offer 100 per cent back on up to two dental check-ups every year when you visit a Members Choice Advantage dental clinic, which doesn’t impact your extras limits.”
Not all providers are created equal. As with hospital cover, insurers have different agreements with providers, the details of which will determine how much out of pocket you will be for any given service.
Deveny recommends calling your dentist or physio or chiropractor and asking how much they charge for a certain service, then checking that against what your insurer will pay. But she warns it is difficult to navigate and takes time and a lot of effort.
“It’s understanding where those commercial relationships are and then weighing up if you want to be using the same group for all the services. If you’ve been with your dentist for 10 years, you might want to swap now to the insurer’s dentists to make it cheaper. Or the answer might be, ‘I’ve got quite complex needs. My dentist knows me really well.’
If you’re beyond confused, Jack advises speaking with your health fund.
Understand discounts and loyalty
While it is not common for consumers to be able to negotiate on the price of health insurance in the same way you may be able to with other contracts, such as electricity, discounts may still be available.
If you are part of a large workplace or union, you may be offered a corporate discount with a particular fund or have access to an industry-specific fund. Or your fund may offer a discount if you are able to pay upfront or premium costs may be lower if you are willing to pay a larger hospital excess fee. A small number of funds even allow you to lock in your annual premium before they rise on April 1, helping you to delay the price hike.
Sign-up discounts are also growing in popularity and scope. Some funds may offer a set number of weeks’ cover for free. However, be mindful of the fine print as you may discover the savings are spread across several years and only if you pay annually.
However, some funds also may lure new customers in other more immediate ways.
“You can get some good discounts for other health-insurance related benefits, like your extras, and often they might be offered in terms of the waiting periods. You might serve a shorter waiting period or a waiting period might be waived for particular services,” Bird advises.
Customer loyalty is also growing in popularity and some funds now are offering additional services to secure yours. It can include funds offering their own health checks and services or providing access to shopping discounts.
“It’s part of what we call our More For You programs where there’s no gap services,” Jack says. “In dental, there’s a number of preventive services making sure you go and have your check up, your scale and clean, to help prevent more significant dental disease occurring.
“We offer skin cancer checks, free heart health checks. We’ve done 10,000 heart health checks since 2022, and the vast majority of people that came and had those checks actually had some significant risk factor and were sent off to their GP.”
Medibank is similar with its own rewards program, according to Milisavljevic: “Customers can earn points for looking after their health and wellbeing, and can earn up to $400 every year. They can put that towards reducing their annual premium or buying items from Apple, Adidas, Brooks and many others.”
Downgrading and junk policies
Recent data has shown more people are downgrading their health insurance policies rather than getting rid of them entirely. While it is good practice to review what you do and don’t need, our experts say there are some things to be mindful of.
“At the end of the day, our health is the most important thing to us and people question whether they should hold on to their health insurance,” Jack says. “Downgrading can mean you’re getting a cover that is more relevant to where you are in your life stage. But I really struggle with that because we don’t really know what we’re going to need tomorrow, the next day, next month.”
Deveny says if you’re considering switching funds, be aware you will not have to sit out the waiting period if you are switching a like-for-like policy. But if you do downgrade a policy and then later decide to upgrade it, there will likely be a waiting period before you can make certain claims on benefits.
“That devil-in-the-detail stuff’s really important,” she says. “And think about your next five to 10 years, remembering that if you’ve got a waiting period, you might have to wait six months or a year for something.”
She advises another option is to consider if it would make sense for you to increase your hospital excess fee to bring down the cost of your premium. Doing so would require you to have a larger rainy-day fund to cover the higher fee if you did end up needing to be admitted to a private hospital.
Milisavljevic says customers can call funds and discuss what policies may best suit their situation.
“In some instances, people have coverage for things they don’t need any more, so we match them to the right product based on their own health needs,” he says.
“But it’s really important that you have the health coverage for things you need. You don’t want to downgrade your policy and then find out you’ve removed coverage for something you actually need.”
When it comes to junk policies – which are typically basic plans people take out for tax purposes – Bird says there are things to consider.
“These are very basic policies which will not really actually cover you for anything in hospital,” he says. “It’s basically just a policy that your accountant will tell you to buy to save money on tax, but it won’t do very much, if anything, when you actually go to hospital; you’ll be relying on Medicare.”
The Consumer Health Forum also recommends people use an aggregated website as well as the government’s own insurance check site, www.privatehealth.gov.au to compare policies.
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