What to think about when switching health funds
There are several factors to consider when you’re switching health funds:
- Waiting periods
- Lifetime Health Cover (LHC) loading
- Loyalty bonuses
- Level of cover
- Gap payments
- Your current and future health needs
We’ve explained each of these in more detail below.
1. Health insurance waiting period
Generally, if you’re changing health funds or policies, you won’t have to sit out your waiting period for the same level of cover if you’ve served it in full already. However, if you apply for a higher level of cover, it’s likely you will have to serve the associated waiting period in full for the extra coverage level.
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.
2. Lifetime Health Cover (LHC)
The good news is switching health funds won’t affect your lifetime health cover (LHC) entitlements/loading, as long as your future cover is still hospital cover.
Note that extras (or ancillary) cover doesn’t count in terms of the LHC loading. In order to cover small gaps in coverage while switching policies, the government allows you to accumulate 1,094 days without hospital cover over your lifetime without affecting your LHC. If you suspend your policy due to being overseas, this is not included in the 1,094 days. If you exceed 1,094 days you may incur the LHC loading.
3. Loyalty bonuses
Certain funds may offer bonuses or discounts to long-time members/customers in order to reward loyalty. It may be worth looking at any bonuses or discounts you may have incurred, and weighing up whether it’s worth losing them by switching health funds. Also keep in mind that certain funds may offer sign-up bonuses, which is one factor worth taking into account. Your older policy may also have benefits that are not currently offered by other providers in the market.
4. Level of cover
Before you consider switching health insurance it is essential to look into whether the new product offers you the level of cover that suits your needs and preferences. While we all like to save money where we can, we’d encourage you to avoid choosing a health insurance policy based on price alone, and to consider a range of factors. Canstar researches and rates health insurance policies for outstanding value based on a combination of price and features. Click here to read Canstar’s most recent Health Insurance Star Ratings report.
5. Gap payments
Will you have to choose certain hospitals or medical specialists who have an agreement with the fund at hand to avoid hefty out-of-pocket expenses? This is worth considering when thinking about changing health funds.
Cost is undoubtedly an important factor to consider when deciding on whether a particular fund offers good value. But be careful of making a decision on cost alone – your policy should still provide you with adequate cover.
7. Your current and future health needs
Hopefully, the new health insurance policy you are considering meets your current needs and preferences – however you should also consider your future needs. If you suspect you may need cover for, say, orthodontics in the near or distant future, it may be worth checking whether the prospective fund covers it. Also, consider what your household may look like in the near future.
Changing health insurance funds doesn’t need to be a harrowing process, but make sure you have given the decision close consideration so you can rest easy. And in case you change your mind, check the cooling-off provisions. You may be given a 30-day period in which you can cancel your new arrangement, providing you haven’t made a claim in that time.