I used to take offence at the term “lazy tax”, like the world was somehow blaming me personally for being overcharged. Financial commentators sometimes use it to describe the high prices people are stuck paying because they don’t look around or ask their provider for a better deal. Well, I am now officially claiming myself as living, breathing proof that the lazy tax is a real “thing”.
On April 1, 2019, the Australian Government reformed the private health insurance sector, aiming to simplify the process for people wanting to find the best cover for their personal circumstances. This included whittling down a smorgasbord of different types of hospital cover to four main tiers – Gold, Silver, Bronze and Basic – and giving insurers the option to add a “Plus” category for Silver, Bronze and Basic.
So there are now up to seven categories of health insurance, and each category has firm rules for what has to be covered. The idea was that the introduction of the tiers would make it easier for people to compare policies within each category and make it clearer for them to understand they can expect to be covered for.
This was huge news. Huge. And I honestly meant to take action back then. But life got in the way – the usual story, two kids, full-time work – which, I know, is an extremely poor first-world excuse. So, an embarrassingly long time after the big change, I finally called my health insurer to sort out my new cover.
And I was pleasantly surprised. No, more than that. I think it’s safe to say I was shocked. No, flabbergasted, slack-jawed, dumbfounded, astonished, amazed and bedazzled. And I was also patting myself on the back (although also simultaneously kicking myself for not doing it sooner).
This is roughly how the conversation went
Sit at desk. Notepad, pen, water, check. Deeep breath. Say confidence affirmations in head: “I can do this. I can do this. It’s my money. I am a customer, it’s my right to ask for a better deal.”
Dial. Put it on speaker. (Check myself, confused at my rising anxiety. Why?)
Listen to four options (hmmm, not exactly a claim, not a new customer… what, no option saying “press 8 for tight-fisted customer who has made far too many claims already this year but who still wants to ask for a discount, because why not, but feels guilty because shouldn’t I be taking the weight off the public system as a middle-class taxpayer who cherishes Medicare and all the good it does for everyday Aussies?”)
Select 3 for customer service.
Consultant: “Hello, welcome to (my health insurer), how can I help you today?” (A pleasant voice – so far so good).
Me: “Err, hi. Um. Well. You see. I want a better deal. Ah, I mean I am already a (health fund) customer. But I need to reduce my premiums because they are … well … ok … yes, they are extraordinarily large. Huge. Just the biggest bill I have every month. And I am not even kidding.” (Why do I ramble?)
A pause in the call.
Me: “Uh, hello?”
Consultant: “Hi, sorry I am just pulling up another screen. No problems, let’s go through your cover. Could you tell me your name and member number?”
I mumble my name and number, and go through the whole identification process thing now required by law.
Consultant: “OK. Now what I will do is take a look at your level of cover and see what we can do.”
I wait, expecting an exasperated sigh or to be stuck by a bolt of lightning.
Consultant: “Right-eee-oh. Oh, yes, that is a lot of money in premiums. Wow. OK.”
Is that helpfulness I hear? I think it could be..
Consultant: “You are on our top tier of extras, but I will talk about that later. First, let’s take a look at your hospital cover. You are on our top cover there, too. And with only $250 excess. That’s why it’s so expensive. Let me have a look here…”
I silently curse my laziness. I may have also done this out loud. I hope not.
Consultant: “Oh, there’s no need to worry, we’ll get this sorted.”
Damn, I obviously did say it out loud. (My sincere apologies to the consultant, if you ever read this. You were obviously trained well.)
Consultant: “So, we have two levels below this cover that I would recommend considering. There is also Basic cover, but, I don’t think that would suit you, looking at your history here. Are you planning to have any more children?”
Me: “Uh, that’s a big no there. I mean, I love my kids, adorable, both of them, most of the time, seriously, but I think my family is complete. Why?” (Rambling again! GAWD!)
Consultant: “Well, this top level of cover is basically designed for people who are planning to have children. So you don’t need that. Oh, but you need to consider that it also is the only level of cover that offers unrestricted psychiatric cover.”
Me: “What does that mean?”
Consultant: “It means that if you go on a lower level of hospital cover and you or one of your family members has to go into a psychiatric hospital, we would only pay between $100 and $300 a day for the bed itself. You would have to cover the gap for the rest of the bed fees.”
Me: “Oh.” (From past research for work, I know that can be quite substantial – sometimes as much as several thousands of dollars per day, depending on where you live and what treatment you need.)
Consultant: “The waiting period for psychiatric services with us is two months. However, the Federal Government’s mental health care guarantee means that if someone in your family does have to be hospitalised in a psychiatric facility, you can ring us up and say you want to upgrade your policy and that you want the psychiatric care waiting period waived. You can do that once in your lifetime – so even if you switched funds, you couldn’t do that ever again.”
Me: “OK, I can live with that.”
Consultant: “If we go to our medium (Silver) hospital cover, that means you will also lose cover for joint replacement, kidney dialysis and some cancer treatments. (She reads me a complete list of exclusions).
Consultant: “And the excess changes. You are now on $250, but that would now be $500 a year, but only for adults covered by the policy. We don’t charge that for children. Is that OK? There is also an option of a $750 excess.”
Me: “Let’s calculate it using the $500 excess.”
Consultant: “OK so, I will just do the sums. Wait, is that right? I’ll just check again. (I hear her manually type in some numbers on a keypad.) Yes, so, that’s a saving of around $176 a month. Which is $2,119 a year. Wow, that’s a good Christmas present… Hello? Amanda?”
Me: Silence. Stunned silence. Then, after I metaphorically pick myself off the floor: “Right-eee-oh then, indeed. That’s unexpected. I’ll be switching to that policy, thanks.”
Another unexpected surprise
Consultant: “Hang on, I see that you are paying us for your insurance via direct debit from an account with a different bank. (My health insurer also has a banking arm.) Do you have a everyday transaction account with us?”
Me: “Yes, I do.”
Consultant: “You will get a further 4% off if you pay your insurance via direct deposit from that account you have with us. So that’s a total saving of more than $2,200 a year.”
Me: “Yep. Yep. I’ll be doing that, too!” (I may have done a little victory dance here.)
Now onto extras…
After that welcome news, we moved on to the extras component of my health insurance policy. Extras cover helps pay for specialist services, some medications and treatments, and tests that are not part of an in-hospital visit, such as those conducted by a dentist and physio. The government’s health reforms did not stipulate minimum standards for extras cover levels, except for deeming that some natural therapies would be excluded from the list of health services able to be covered. So, health funds can set their own limits on what they cover (as long as it’s within industry guidelines).
My consultant pulled up my family’s list of extras policy claims for the year, and tallied them up. She worked out that I had actually been refunded marginally more than I had paid the fund in premiums.
“And that’s how you want it,” she said.
She went on to explain that I was actually pretty lucky, as the fund had recently changed its extras cover arrangements but had kept my family’s cover on the old regime. This means that my extras cover paid for more services than the equivalently priced plan the fund was currently offering. For example, my family’s lifetime limit for orthodontic work was $1,000 higher than the current plan’s cover limit.
She asked: “Do your kids need braces?”
“Yes,” I said, sighing at the thought.
“I wouldn’t advise touching your extras, then,” she said.
To be brutally honest, the reason why I was ringing to ask for a better deal was that I felt like I was continually putting my hand in my pocket to pay gap fees or that I was being told that one of my claims had been denied because I had maxed out the allocation for the year. I was feeling like I wasn’t getting good value. But, I have a different view now, after being told the amount of refunds I had received produced this very surprising scenario: I am actually more than breaking even, in terms of claims versus premium payment.
But it’s a bittersweet thought – it’s only “good value” because my family has made lots of claims, which means we’ve also forked out a lot of money on specialist appointments and medical tests in the first place. It would be a different story if we were a family gifted with perfect health, 20-20 vision, straight teeth and perfect balance (we have banned coffee tables at our house because of the latter. It’s a long story…).
And after viewing a few more documents and authorising the change, it was done. My next payment will be about $184 less than my last one was.
This victory has me thinking – where else am I paying a “lazy tax”? Hmmm … home loan, you are next on my hit list. But why stop there? Car and home insurer; superannuation fund; energy and NBN provider, watch out – I’m coming for you…
Editor’s note: While switching health insurance policies or funds can be worthwhile for some people, it’s not necessarily appropriate for everyone. If you decide to replace an existing health insurance policy, you should consider your personal circumstances, including continuing the existing cover until the replacement policy is issued and cover is confirmed. If you do switch, you may have to serve waiting periods before you can access certain benefits under your new policy. Your current policy may also have different features to similar or other products available in the market. Please consider what features are right for you and refer to the provider for further details on a policy.
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