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A Consumer Friendly Guide To Health Cover

Private health cover used to be considered a fact of life in Australia. But as costs have continued to creep and politics have become involved it’s morphed into a divisive and emotive issue.

Health insurance is one of the most personal bills that we end up paying, but if you ask your friends you quickly find out that it’s one most people don’t understand.

It can be hard to comprehend what the premium you’re paying actually gets you, and it’s easy to feel like you’re paying too much for something you don’t use enough.

While most of us have private health cover, not enough of us understand it.

We reached out to our friends at Health Insurance Comparison to get the insider tips on the popular misconceptions that can make health cover more expensive than it needs to be. Here's what they had to say...

1. You’re never locked in

Part of the confusion is in the name, ‘insurance’. Most insurances that people are familiar with involve lengthy contracts, but you’re actually never locked into your health cover.

That’s because the government has structured the whole system to enable and encourage people to look for a better deal. This is meant to encourage competition among the health funds to reduce the cost to you.

Even if you’ve paid your premiums in advance, if you find a better deal and you’d like to switch you’re entitled a refund of the cover you haven’t used.

Finally, if you still have items you need to make a claim on, you don’t need to wait to switch. As long as you’re making the claim within two years of the service you’re still entitled to that refund.

There are really no barriers to changing to a better deal if that’s what you’d like to do.

2. Extras cover isn’t insurance

Within health insurance there are two products you pay for. Hospital cover (which usually includes ambulance cover) and extras cover.

Extras cover is what you use when you visit the dentist, the physiotherapist, chiropractor, and most specialists. It’s also the kind of cover that’s easiest to overpay for.

When you make a decision about your insurance it’s a good idea to think about what services you need and which you’re likely to use.

It’s also smart to look at both the benefit limit (the total, yearly benefit you can be paid back for a service) and the percentage rebate you get back for each visit.

A trap of bargain extras policies is that they are able to be so cheap because they might only pay a small rebate each visit.   

3. New policies are regularly released

This a big reason why there are so often savings available for people who compare. Older policies do become dated, and if you’re simply renewing an outdated policy you can miss out on a lot of value.

When you first purchased your policy it’s really likely that it was a good deal, but health funds regularly update their policies to remain competitive.That’s why, if it’s been a few years since your signed up, it’s likely that a better offer has become available.

As we mentioned earlier the structure of the private health system is meant to encourage competition. The fact that there are no lock-in contracts is a big reason why people who are confident in their knowledge of the system are able to easily save.  

There is another relevant aspect to mention, the April 1st premium rise. Every year the cost of your policy increases on April 1, but the amount of that increase varies significantly between suppliers. The only way to know what the increase will be to you is by doing the research (or by speaking to someone who’s already done it).

4. No waiting periods for similar cover

A lot of people who rely heavily on their health insurance are worried that they’ll go through a period where they’re not covered. But this is a simple misconception.

If you decide to switch your cover to a better deal, as long as you’re moving to a similar level of cover the waiting periods you’ve already served will be carried over to your new policy.

5. Getting older doesn’t mean you need the highest level of cover

Just because you’ve reached a certain age it doesn’t mean you need to have every elective service covered. This applies to both hospital and extras cover.

Part of our job is to have a conversation with our customers about their current condition and risk factors. That way we can provide an educated recommendation of the cover they’re likely to need.

The simplest example is that many high-tier policies include pregnancy cover. If you’ve elected for the highest level of cover that means you’re still paying for it when you’re 60, 70 and so on.

There are actually a number of funds that will allow you to have their top level of cover without pregnancy cover, and these might be a good option for you.

Health funds all determine their policy inclusions individually, so it falls to consumers to be aware and not pay for cover they don’t need.

6. Saving money by paying ahead

If you have the money available, you can save by paying your premium for a whole year. The best time to take advantage of this is just before the April 1st rate rise.

If you pay your yearly premium before the rise hits, you can lock in the cheaper premium before the rise happens. It’s a really simple way to reduce your costs that you can repeat year on year.

If reading this has left you with any questions, you can head over to Health Insurance Comparison and compare cover from their panel of providers.

You’ll also receive a free, no-obligation phone consultation with one of their advisers who can help you assess your current cover and explain your options for saving.

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