Common Health Insurance Definitions & Terms

The A-Z of Common Health Insurance Terms

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Definitions & Common Terms

A

Accident:

A bodily injury sustained as a result of unintentional, unforeseen, unexpected actions or events that require treatment by a registered medical practitioner at a hospital. This excludes accidental illness, surgical procedures, pregnancy, injury or illnesses induced by alcohol or drug dependence and aggravation of a pre-existing condition.

Accommodation:

Hospital bed, patient meals and nursing care while in hospital.

Acute Care Certificate:

This is applicable to long-term patients. An Acute Care Certificate is issued by a treating doctor for each 30-day period that a patient requires hospitalization. Without this certificate, which explains why the patient needs to remain in hospital, health care funds are not obliged to pay.

Admission:

To get treatment as a private patient in a registered public, private or day hospital you must be admitted by a doctor. Treatment in the emergency room of a private hospital is not considered an admission.

Agreement Hospital:

Hospitals that have special partner agreements with different health funds guarantee 100% health insurance cover for certain theatre and accommodation charges. Health funds have these agreements in place to keep out of pocket, or gap, expenses to a minimum for their members.

The list of agreement hospitals, also known as participating private hospitals, across Australia differs with each health fund. It is wise to make yourself familiar with those your fund recommends and avoid using a non-agreement hospital where possible. Before you receive hospital treatment, ask your fund about additional costs.

Alternative Therapies:

These include such practices as Acupuncture, Alexander Technique, Aromatherapy, Bowen Technique, Chinese Medicine, Dietary, Homeopathy, Hydrotherapy, Hypnotherapy, Kinesiology, Massage, Myotherapy, Naturopathy, Reflexology, Remedial Massage, Shiatsu, Western Herbalism.

Ambulance:

An ambulance is used for emergency transport when life-saving treatment is required. A doctor can also call an ambulance when he believes a patient has suffered significant trauma and needs urgent hospitalization. Ambulance services are covered on most private hospital benefits but the benefit levels vary between states. Ask your health fund exactly what cover they provide.

Ancillary Cover:

Also known as extras cover. This means services such as dental, optical, physiotherapy, chiropractic, alternative therapies and pharmacy that are not covered by Medicare.

Annual Limit:

The maximum benefit payable for a particular service within a 12 month period.

Antenatal:

Antenatal classes, run by a midwife or physiotherapist, provide childbirth education prior to the birth. Antenatal visits are consultations between the expectant mother and her midwife who is in private practice.

Artificial Aids:

Aids or appliances required by a patient, either as a result of illness or medical procedure. These include a wheelchair, nebuliser, artificial limb, walking frame and many more. Aids should be ordered by a doctor if a health fund is to cover costs. Items supplied by a public hospital will not usually be covered by private health insurance.

Assisted Reproductive Services:

The term used for the process of conception through a method other than the natural method. This is most commonly used for reproductive technology such as in-vitro fertilization (IVF).

B

Benefit:

The dollar amount paid to you by your health fund for hospital or extras cover.

Benefit Limitation Period:

These usually commence after standard waiting periods have been served and you are only entitled to limited benefits for a specified condition or treatment prior to full benefits kicking in.

C

Calendar Year and Membership Year:

The calendar year is 1st January to 31st December. Membership year commences on the date that the member joins the fund. Some funds use the calendar year, regardless of when you join so clarify this upfront with your fund.

Certified Age at Entry:

The age of each health fund member when they purchase hospital cover for the first time.

Change of Cover:

The term used to describe the upgrading or downgrading of your health insurance policy. When doing this, check if it affects any waiting period before benefits can be claimed.

Claim:

Invoices relating to hospital, doctor or ancillary provider presented to a health fund for payment. If you have paid the invoices prior to making a claim to your health fund, a direct payment such as cash or cheque will reimburse you. If the invoices have not yet been paid, the health fund will draw a cheque in favour of the medical service provider. You may then be required to pay the balance owing, i.e. the difference between the actual bill and the amount the health fund will cover.

When claiming, you must fill in the appropriate claim form and attach all documents and receipts relating to the claim. More and more health funds are encouraging members to settle their claims on the spot with extras providers, such as dentists, chiropractors etc. Electronic claims through HICAPS and Ezyclaim, are similar to an EFTPOS transaction and pay the health fund benefit immediately at the point of sale. This saves the extra inconvenience of putting in a claim later at your health fund.

Community Rating:

This means that everyone is entitled to buy the same health insurance product, at the same price, and is guaranteed the right to renew their policy. A health insurer cannot refuse to insure you, or refuse to sell you any policy you want to buy. There are some exceptions, such as the Lifetime Health Cover loading which will usually be higher.

Compensation and Damages from Other Sources:

Fund benefits are not payable when compensation and/or damages may be claimed from another source. For example, Workers’ Compensation, Compulsory Third Party Insurance, Common Law, Sports Insurance, Travel Insurance, Litigation, Crimes Compensation.

Contributor:

The contributor is the person who initially applied for membership and whose name is on the policy.

Co-payment:

An agreed amount paid by the member towards the cost of daily hospitalization.

D

Day Surgery:

A private hospital or facility where patients are admitted, treated and discharged on the same day.

Death and Trauma Cover:

Some funds offer this as an additional benefit with hospital or extras cover. Condition and benefits vary greatly between funds.

Default Benefits:

The minimum level of benefits private health insurers must pay, as set down by the Government. These cover claims for treatment provided in public hospitals, non-contracted private hospitals and day surgeries.

Dependants:

Dependants are generally considered single children under 17 years and full-time students under 25 years who are living at home and have no dependents of their own. Dependants can work part-time, the amount varying between funds.

Some health insurance providers allow single, non-dependant children, aged 17 and over to remain on the family membership, regardless of whether they are working or living away from home. Each fund has different requirements and additional premiums may apply.

Dietetics:

Service provided by a registered dietician. Does not include membership in diet clubs/programs e.g. Weight Watchers.

Diagnostic Tests:

Diagnostic tests can include such things as x-rays and blood tests.

DoHA:

Department of Health and Ageing, responsible for policies relating to private health insurance.

Domiciliary Care:

Non-medical treatment such as personal assistance, showering and dressing that is not covered under home nursing.

E

Elective Surgery:

Surgical treatment of a condition that, according to your doctor, does not require immediate attention.

Eligibility Checking System:

An online system that hospitals use to electronically confirm membership details and benefits for a patient who is admitted to hospital for treatment. This system is available 24 hours a day.

Emergency Treatment:

Considered to be emergency treatment when the patient is treated by a doctor and is in danger of suffering the loss of life, limb, bodily function or mental ability, is in severe pain or is bleeding.

Excess:

In order to make your contributions lower, you can elect to pay an excess, much like a car insurance policy. It is an amount of money you agree to pay per hospital admission before health fund benefits are payable. An excess does not apply to extras cover.

Extras Cover:

Also known as ancillary cover. This means services such as dental, optical, physiotherapy, chiropractic, alternative therapies and pharmacy that are not covered by Medicare.

Exclusions:

Hospital procedures in a public or private hospital which you will not receive payment for.

G

Gap:

The ‘gap’ is also referred to as ‘out-of-pocket expenses’. The Federal Government has a schedule of fees for medical services, called the Medicare Benefits Schedule (MBS). Using this MBS Medicare pays 75% of the fee for a medical service provided in hospital to a privately insured patient.

The patient’s health fund covers the remaining 25%, provided the procedure is not excluded from that cover. If Medicare does not pay a benefit, neither will the health fund. The gap occurs when doctors charge in excess of the MBS and the patient is forced to pay the shortfall between the medical bill and benefit paid by the private health insurance fund.

General Hospital Costs:

These include accommodation fees, theatre and labour ward fees, drugs, dressings and local phone calls. If a patient is in a critical condition, an intensive care room fee may also apply.

General Treatment Cover:

This is non-hospital medical services that are not covered by Medicare, such as dental, optical, physiotherapy, other therapies and ambulance.

Government Rebate:

The Federal Government has introduced a rebate of on all private health insurance and ancillary/extra policies to help Australians meet the costs of private health insurance. All Australians eligible for Medicare, regardless of income or level of cover, are entitled to receive the rebate. The method of which it’s calculated is means tested, based on annual income and age.

The rebate means if you pay a $1,000 premium on private health insurance, you will receive a certain amount of money back from the Federal Government. You can claim the rebate in the following three ways:

1. 1. Premium reduction through your private health insurance. Apply at your health fund.
   2. Tax rebate on your annual tax return.
   3. Direct payment from Medicare offices. Choose a one-off annual payment, or if you pay monthly or fortnightly, you can claim cash or a cheque over the counter.

H

Home Nursing:

Professional nursing care provided in the home. Does not include feeding, clothing etc.

Hospital Treatment:

Treatment provided to you during admission to a hospital, whether it is overnight or on the same day.

I

In-Patient:

A person who is admitted to a hospital and occupies a bed.

L

Labour Ward Fees:

These include the costs for delivery of babies in a birthing suite.

Lifetime Health Cover Loading:

A Federal Government initiative introduced on 1 July 2000, designed to encourage people to take out hospital insurance earlier in life, and to maintain that cover. The premiums health funds charge for LHC will differ depending on the age of members when they first take out hospital cover with a registered health fund.

M

Medicare:

A compulsory Federal Government public health insurance scheme covering all Australian residents. It is partly funded by a levy on taxable income and covers public hospital treatment and doctor services.

Medicare Levy Surcharge:

This is a Government-imposed surcharge on income earners who do not have private health insurance and instead rely on Medicare and the public hospital system. It is designed to encourage people to take out private health insurance and thus lessen the load on the public system.

The surcharge is imposed on singles with an annual taxable income of $90,000 or more and couples or families with a combined taxable income of $180,000 or more. We go into more detail about how this is calculated in our article on the Medicare Levy Surcharge.

Medically Necessary:

When treatment is deemed necessary by a medical practitioner.

N

Non-Participating Private Hospitals:

Private hospitals which do not have an agreement with your health fund. Choosing to go to a non-participating hospital will mean the full cost of your stay or treatment may not be covered and you will have to pay ‘out-of-pocket’ expenses.

Nursing Home-Type Benefit:

This is a benefit set by the Federal Government for a patient who is in hospital, but not in need of medical treatment while awaiting a nursing home placement. A daily co-payment towards the cost of hospitalization is required and this has also been determined by the Government.

O

Obstetrics:

Medical care when dealing with childbirth, including prenatal and postnatal care. Obstetrics should not be confused with gynaecology which is care and management of the female reproductive system.

Ombudsman:

The Private Health Insurance Ombudsman deals with consumers’ health insurance problems. The Ombudsman also publishes reports and consumer information about private health insurance. If you have a complaint, talk to your fund first.

If you are still not satisfied contact the ombudsman about any aspect of private health insurance. Phone 1800 640 695 or visit www.phio.org.au

Optical:

Refers to lenses and glasses prescribed to correct a sight defect.

Out-Of-Pocket Expenses:

Out-of-pocket expenses are also referred to as ‘the gap’. The Federal Government has a schedule of fees for medical services, called the Medicare Benefits Schedule (MBS). Using this MBS Medicare pays 75% of the fee for a medical service provided in hospital to a privately insured patient.

The patient?s health fund covers the remaining 25%, provided the procedure is not excluded from that cover. If Medicare does not pay a benefit, neither will the health fund.

Out-of-pocket expenses occur when doctors charge in excess of the MBS and the patient is forced to pay the shortfall between the medical bill and benefit paid by the private health insurance fund.

Out-Patient Services:

Patients not admitted to hospital may still require services provided by a hospital. These include emergency services, pathology, radiology and visits to specialists? surgeries.

P

Palliative Care:

Palliative care is specialized health care designed to support people living with a terminal illness.

Paramedical Services:

Services received in hospitals such as pharmacy, physiotherapy, hydrotherapy and occupational therapy are known as paramedical services.

Participating Private Hospitals:

Hospitals that have special partner agreements with different health funds guarantee 100% health insurance cover for certain theatre and accommodation charges. Health funds have these agreements in place to keep out of pocket, or gap, expenses to a minimum for their members.

The list of participating private hospitals, also known as agreement hospitals, across Australia differs with each health fund. It is wise to make yourself familiar with those your fund recommends and avoid using a non-participating or non-agreement hospital where possible.

Before you receive hospital treatment, ask your fund about additional costs.

Pharmaceutical Benefits (PBS):

The national Pharmaceutical Benefits Scheme (PBS) subsidises the cost of approved prescription drugs. Private health funds are prohibited from paying a benefit for the fee charged for subsidized drugs dispensed on a PBS prescription.

Health funds usually pay the cost of a drug in excess of the PBS fee to a set maximum. Each fund varies so check first.

Portability:

The ability for people to transfer from one insurer to another, without re-serving waiting periods.

Pre-Existing Condition:

An ailment, illness or condition is considered to be pre-existing if, in the opinion of a doctor appointed by the health fund, it existed at any time during the six months prior to the member joining a hospital cover or upgrading to a higher level of cover.

Health funds can impose a maximum 12-month waiting period for hospital treatment for ailments, illnesses or conditions that are considered to be pre-existing.

Premium:

The upfront payment, or regular periodic payment, that a policyholder makes to an insurance company for suitable cover.

Private Practice:

A medical practice which receives its income from fees charged to patients and does not rely on subsidies or funding from any public sector body. The private practice can be set up as sole, partnership or group practice.

Prostheses:

A prosthesis is a surgically-implanted item like an artificial knee or hip joint.

Public Hospital:

A hospital funded by the Government. Recognised public hospitals have access to the Medicare Benefits Schedule, the Pharmaceutical Benefits Scheme and private health insurance arrangements. You are a public patient if you choose to be treated in a public hospital under Medicare, by a doctor appointed by the hospital.

You may also choose to be a private patient in a public hospital. Private patients have a choice of their own doctor and their private health cover will generally foot the bill for the charges, depending on the level of cover.

R

Rehabilitation:

A rehabilitation program helps a person who is recovering from illness or injury to regain as much function as possible, Rehabilitation also teaches long-term strategies for ongoing disabilities.

Respite Care:

Respite care is residential or community care to assist frail, older people and others with a disability to continue living in the community. The scheme aims to give day-to-day carers a temporary break from their responsibilities.

Restriction:

Some hospital covers have procedures that are restricted, meaning they will only pay the Public Hospital Benefit for that procedure. Thus you will pay a considerable gap fee if you choose to be treated for a restricted procedure.

T

Theatre Fees:

Fees that a hospital charges to a patient, or directly to a fund, for the usage of the operating room.

W

Waiting Period:

The length of time you need to wait after joining a health fund before you are eligible for benefits. All private health insurance funds have waiting periods which vary according to the fund.

For instance, all hospital covers have 12 month waiting periods for pre-existing ailments and pregnancy (childbirth). Once the waiting period is over, you will receive the full benefits listed under your level of cover for that treatment type.

These are a general explanation of the meaning of terms used in relation to health insurance.

Policy wording may use different terms and you should read the terms and conditions of the relevant policy to understand the inclusions and exclusions of that policy. You cannot rely on these terms to the part of any policy you may purchase.

Refer to the product disclosure statement and Canstar’s FSCG.

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