What to Consider When Choosing Health Insurance

Article originally published by Christine Thelander on October 14, 2016.

There are a lot of factors to consider when choosing health insurance to help ensure you’ve picked the best cover for your circumstances and preferences.

The benefits of private health insurance can be appealing for some, so if you’re interested in choosing a policy it’s important to shop around. There are dozens of insurers to choose from, all with multiple products on offer.

Here are some things to think about when choosing private health insurance, whether you’re switching funds or it is your first policy.

Assess your health and family history before choosing

Looking at the current state of your health should be a simple process. Take note of any pre-existing conditions you and/or your partner currently have and think about what you might need to accommodate in the near future (e.g. pregnancy or knee surgery). This may help narrow down your policy choices.

Also, think about your wider family group, including parents, siblings, grandparents, aunts and uncles. Have they experienced any of the following hereditary conditions or genetic disorders?

  • Diabetes
  • Heart disease
  • Cancer (including breast cancer, ovarian cancer, bowel cancer)
  • Osteoporosis
  • Vision impairment (needing glasses or vision aids) or eye disease (including glaucoma)
  • Conditions requiring physiotherapy or occupational therapy

If some of these conditions run in your family, you could think about choosing private health insurance that provides cover, or potential cover, for some or all of these conditions. Not factoring in conditions you could likely end up with when choosing private health insurance could cost you more in the long-run. If you don’t cover a condition now, and you need to up your coverage later to cover it, or you switch plans or providers, this condition could be deemed a pre-existing condition and may not be fully covered.

The table below displays a snapshot of 5-Star hospital & extras policies on Canstar’s database with links to providers’ websites, sorted by provider name (alphabetically). Please note the results are based on a couple aged under 35 in NSW, with no pregnancy cover.

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Are health insurance benefits per policy or per person?

HCF Chief Marketing and Sales Officer, Danny Saksida, said customers should find out whether the policy they have, or are considering purchasing, has benefits based on per person or per policy. This can make a big difference to the amount you may be able to claim, which can be a determining factor when choosing a private health insurance provider.

If you have a policy with one set benefit limit of, say, $2,000 in extras (like optical and dental), that covers all the family members covered by the policy, then you as a group are limited to that $2,000 limit.

In contrast, if you have a policy with $2,000 extras benefit limits for each family member covered by the policy, then each individual can use up to $2,000 in extras benefits, and as a family of four there would have $8,000 of potential benefits available in total.

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Do I need extras cover?

Extras cover or ancillary health insurance is an additional insurance policy that covers a range of services that your policy may not already cover, such as physiotherapy, ambulance cover, optical services and dental services. Extras cover can cover you for those expensive “out-of-pocket” costs that you or your family may require.

When choosing health insurance, consider whether it would be good value for you to add this cover as well and whether you would actually use it. If you don’t go to the physio or buy new glasses each year, then there’s not much point in paying for those benefits!

To select the right extras, Medibank General Product Manager Luke Fishley recommends customers look for a private health insurance fund that makes it simple to switch extras cover as your stage of life changes.

“Ask your provider how easy it is to change from one cover to another,” he suggested.

In different stages of your life, you may be wanting to claim more on dental extras (e.g. when you have young kids with ongoing dental work), or more on optical extras when you reach an older age.

Customers should also be aware of waiting periods that apply to those extras. Please also keep in mind benefits vary between policies, so consider what you could potentially be giving up before you switch.

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What health insurance costs

Private health insurance can be pricey, so it’s important to know realistically how much money you can afford to spend on health insurance each month. Calculate that figure and keep it in mind when choosing private health insurance. While the most comprehensive policy available will likely give you greater protection, it should be weighed up against what you can afford.

Of course, there are some good sign-up incentives on offer from time to time that can be worth taking note of.

Canstar’s star ratings reports annually research hundreds of health insurance and extras policies. In 2017, we uncovered the following average private health insurance premiums at different life stage profiles as follows:

The excess on your policy is the amount you will need to pay per hospital visit before your health insurance kicks in. Increasing the excess is a way of reducing your insurance premiums. However, you should consider whether you could afford to pay the excess if you needed to unexpectedly.

Work out your rebate level

Some consumers are eligible for a government rebate to help cover the cost of their private health insurance premiums (Department of Health). This rebate is means-tested based on your age, and your income for singles and families. The ATO has a good private health insurance rebate calculator if you’re not sure what you’re entitled to.

Consider the extra perks

Some health funds also offer a range of programs and incentives to improve your health and wellbeing, often being heavily subsidised by your health insurer. While these extras should not be the main reason you go with one fund over another, they can be a helpful “pro” or “con” to consider when choosing between providers.

Consider extra health perks

Health funds can have exclusive deals with their partner businesses, which could save you money elsewhere. For example, Bupa offer discounts on Garmin, Goodlife, Fitness First, HOYTS and other Bupa products and services (at the time of writing), while nib offer rebates on gym membership and weight management program fees through selected policies. For more information, contact your health fund.

Assess your options

Once you know what the important inclusions are in your policy, the excess you are comfortable with and the price (net of rebate) you can afford to pay, it’s time to compare health insurance providers and policies and make a shortlist that could suit your needs. For more help with how to choose private health insurance, Canstar’s health insurance comparison website is a great place to start.

Hopefully, by following these steps, choosing private health insurance that represents great value for your personal situation could be a much simpler, smoother process.

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