You may have heard that public hospital waiting times are blowing out – again. For instance, hip replacement procedures had an average wait of 293 days last year, while cataract surgeries hover around 158 days.
Such a predicament has driven many seniors to explore private health insurance for the first time, or to review their existing levels of cover – but if you’ve not reviewed your health cover recently, or this is your first foray into looking at policies filled with industry-insider jargon, it’s easy to end up with a policy that doesn’t deliver good value for you.
As you age, however, early diagnosis of chronic conditions, and prevention of joint and bone weaknesses becomes increasingly important. Your personal health needs are ever-evolving, presenting unique priorities and challenges – and costs. The health insurance industry sometimes plays on your fears, and it’s worth taking some time to properly consider all the angles before buying a new health insurance policy that best suits your health needs now, and into the foreseeable future.
I spoke with Compare Club’s health insurance expert, Eli Boroda, recently about avoiding common pitfalls when looking for the right health insurance policy.
An expert’s shortlist of avoidable health cover mistakes
1. Not all that covers you is gold:
Many of us assume a ‘gold tier’ is the best, and therefore best suited for us. When it comes to health insurance, this isn’t necessarily the case. Avoid paying for cover you won’t need or use – because that’s just a waste of your money.
The tiered system has only been around since 2019, so this is an easy mistake to make. Fortunately, it’s just as easy to avoid making this error.
If you know your hospital tiers, you’ll also know that Gold is the most expensive tier of cover you can get – which is completely fine, if it’s also what you need.
You may already know that the four tiers of hospital cover are:
- Basic: This cheap level of cover includes ambulance and emergency services, and little else.
- Bronze: Gives you 18 categories of surgery and treatments, including joint reconstructions, and major dental surgery.
- Silver: As per the above, plus an additional eight categories of surgery – so 26 procedures and treatments in all – and treatments, such as device implantations.
- Gold: Covers you for all 38 categories of surgery and treatments, including hip replacements, fertility care, and pregnancy.
Note that joint reconstructions are covered by Bronze hospital insurance – but joint replacements are a more serious procedure. You will need Gold cover for that.
“This is the kind of difference it pays to know about,” Mr Boroda says, “because when you’re looking for health insurance value, rather than just the cheapest cover, you’ll want the policy that delivers the most for you, while costing you the least amount of premium.”
If your health needs fall between tiers, ask about Plus policies that cover some higher tier items, but at a lower cost to you. For example, some health funds cover cataract surgery or joint replacements under a Silver Plus policy – so there’s no need to stretch your budget so far.
Compare Club’s Eli Boroda issues this pithy caution: “Steer clear of any insurer that tries to sell you a Gold tier policy without at least asking you a few questions about your health and what kind of healthcare you actually need.” He also says: “If you’re going to pay, make it count.”
2. Don’t assume cheap = good either:
There’s been a fair bit of media attention recently about taking out Basic hospital cover to save on tax. While some furry rodents prefer this, if you have legitimate health conditions you’re attempting to insure yourself for, this isn’t necessarily a good idea.
Cheap policies with too many capped rebates and minimal dollar amounts will have you forking over more and more out of pocket costs as the year goes on – which all boils down to a level of cover that doesn’t actually cover.
Mr Boroda’s comments on these policies is that “this is what we call junk cover. I don’t advise it if you’re older and you know you’ll need more than the minimum here. This comes back to knowing your needs, and matching them to a policy that takes care of you.”
He also warns about the low premiums to bring you in, that are then hiked very quickly within a few months of you purchasing your health insurance policy: “Many insurers prominently display their lowest policy rates, but only reveal your actual cost, including your LHCL, during the final stages of your purchasing process. This is definitely a pitfall you’ll want to avoid.”
3. Not reading your fine print:
All insurance policies come with conditions, and disclaimers below their conditions, etc. Making head or tail of these is daunting – but you’re almost certain to be caught out if you don’t at least look at the fine print.
Carefully reviewing your projected out-of-pocket costs and your rebate clauses prevents nasty medical bill shocks later. This includes being aware of your caps on extras such as optical and dental care.
This is why many private health insurance policyholders turn to comparison services, which have agents who do this for you for free, and that’s certainly a time saver.
4. Not asking enough questions to make your comparisons:
The government has set up several websites to purportedly make comparing health funds, and health insurance policies, easier but they can be about as easy to follow as most bureaucratic pathways. You’ll find these resources here and here. You can also learn about rebates and any tax concessions here.
Comparing premiums and policy specifics across insurers is important because significant discrepancies exist in premiums for Australian seniors. For example, some insurers rebate a set dollar amount when you use your extras like dental, optical or physiotherapy; some rebate a percentage of your specialist’s bill.
The latter policy insulates you somewhat from rising consult fees. The former can leave you more and more out of pocket, while your premium creeps up annually – and that’s probably the biggest pitfall in purchasing a policy: reviewing changes to your rebate amounts and measuring this against how much premium you’re paying each month or year.
Other questions to ask before buying your new health policy:
- Waiting periods: how long must you wait before you can make a claim for any upcoming surgeries or treatments? Does this change if you need to claim care for a pre-existing condition?
- Settlement period for claims: how long does a claim take to process, and what’s the process? Online? Paper forms? Can you make your claim via phone or an app? Prioritising insurers with efficient claims procedures ensures your rebate goes back into your pocket sooner.
- Adjusting your excess: how much does this reduce your premium, and is there a cap on the excess you can pay? It’s usually $750, but there are insurers that insist on a lower excess cap, keeping your premiums elevated.
- When was the last premium price hike for the policy you’re interested in? If it was recent, it could be a signal that your premium might not rise again for several months – though, of course, this isn’t guaranteed.
Mr Boroda recommends quizzing the insurers as much as you can. “Ask them everything you can think of, until you’re comfortable and as certain as you can be, that you have the best value cover for you and your specific health needs.”
If you truly don’t feel confident in your understanding of the finer details of the health cover you’re considering, it’s worth asking trained advisers – after all, it’s your health, and your money, and you’re only over 50. You’ve got a long way to go yet.
Have you ever changed healthcare providers? What made you switch? Why not share your experience in the comments section below?
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YourLifeChoices is owned by health comparison service Compare Club
