Private Health Insurance Reforms 2019: What’s Changed?

Finance Journalist · 17 April 2019

A new tiered system of private hospital insurance policies was unveiled from 1 April, 2019. This is part of a wider Federal Government shakeup aimed at making health insurance policies simpler and more affordable for all Australians. If you’re wondering what this all means for you, we’ve put together an overview of the main changes and when these will come into effect.

According to an APRA report published prior to the reforms coming in, private health cover is currently at an 11-year low with only 44.6% of Australians covered. In addition to this, Roy Morgan research found that nearly half (43.8%) of more than 8,000 policyholders surveyed didn’t think private health insurance was ‘essential’. The government hopes its health reforms will encourage an uptake of private health insurance. Many insurers began rolling out the reforms from 1 April, 2019, the same day premiums rose by an average of 3.25%.

Four tiers of cover

From 1 April this year, you may have started to see hospital policies from some insurers classified into four tiers of cover – Gold, Silver, Bronze and Basic. Insurers have until 1 April, 2020 to adopt these tiers for all of their products.

Gold and Silver policies provide more comprehensive coverage, while Bronze and Basic policies are more limited. For each tier, the government has set minimum requirements for the hospital treatments and services which must be included. The idea is that you’ll be able to compare apples with apples and it’ll be clearer to see what is and isn’t covered by your policy.

The four tiers set bare minimum benchmarks of cover, but the government has advised that insurers may also name policies using ‘plus’ categories – Silver Plus, Bronze Plus and Basic Plus – to add cover above what’s just required, if they so choose. For example, a hypothetical policy which provides all Bronze-level inclusions as well as cover for dental surgery (normally a Silver-tier inclusion) may be referred to as Bronze Plus. As Gold policies provide the highest level of cover available, there is no plus option and they must cover all 38 categories of treatments and services as a standard.

If you already have private health insurance, you may notice your insurer renaming your product or adding or removing services so that your product fits into a higher or lower tier of cover.

See what treatments and services each tier covers here.

Access to mental health services

The government overhaul also included changes designed to increase access to mental health services and drug and alcohol treatment. These changes, which already came into effect from 1 April 2018, allow people who already have minimum psychiatric coverage to upgrade their cover to access in-hospital treatment without facing the two-month waiting period. However, this is only available as a one-off upgrade. The changes also remove the limits on the number of mental health sessions or treatment people can have.

It’s also worth mentioning that under the new tiered system, hospital psychiatric services must be included as a standard in basic policies, although insurers may choose to offer them on a restricted basis under all product tiers except Gold.

Discounts for young people

From 1 April 2019, insurers have had the option of offering premium discounts to younger policyholders. Under the scheme, insurers can offer discounts of 2% for each year that a person is aged under 30, up to a maximum 10% for 18 to 25 year olds. You can then retain this discount until you turn 41 if you remain in the same policy. After this, the discount will be gradually phased out.

Person’s age when they first purchase a hospital product offering discounts Percentage discount that insurer may offer
18-25 10
26 8
27 6
28 4
29 2
30 0

Source: Department of Health

Increasing excess caps

Since 1 April, insurers have been allowed to offer policyholders higher excesses for hospital treatment. The maximum excess limit has now increased from $500 to $750 for singles and from $1,000 to $1,500 for couples or families. The idea is that this will drive down the price of premiums, which rose by an average 3.25% in April. This comes in light of the ACCC’s November report into the industry, which found that Australians are increasingly downgrading or dumping their private health insurance policies altogether because of premium hikes.

Scrapping natural therapies

Since 1 April, insurers have no longer been able to cover a raft of natural therapies such as homeopathy and naturopathy. This decision was made off the back of a review by the National Health and Medical Research Council, which found there was no clear evidence of the effectiveness of the listed natural therapies. The following therapies were removed:

X Alexander technique Aromatherapy Bowen therapy Buteyko
Feldenkrais Western herbalism Homeopathy Iridology
Kinesiology Naturopathy Pilates Reflexology
Rolfing Shiatsu Tai Chi Yoga

Travel and accommodation benefits for regional and rural people

As a result of the reforms which came into effect on 1 April 2019, insurers have also been able to offer travel and accommodation benefits under hospital cover, instead of only under general extras cover. The idea is that this will support people living in rural and regional areas who need to travel in order to receive hospital treatment or services. As with the age-based discounts and excess cap changes, whether these benefits will be available to you will depend on your insurer.

Find out more about the changes here.

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