Health cover is getting a shake-up. Here’s how to benefit

There’s never been a better time to switch health funds! It’s going to get much easier to compare health insurance policies, thanks to a new government system that will sort Australia’s incredible 70,000 policies into a tiered system.

Under changes due to come in in early 2019, policies will be sorted into gold, silver, bronze and basic categories depending on the level of coverage and benefits they offer, and each policy will come with a single, clear page of information on what it covers.

The government has determined what insurers must cover as a minimum under each tier of cover, but insurers will be able to add extra services to each product and sell it as a ‘plus’ policy. For example, a Bronze Plus policy will include all the mandatory categories for that tier of cover, plus some additional categories.

But will you take advantage of an improved comparison system to choose a cover that better suits your needs or your budget? Almost two-thirds of Starts at 60 readers have private cover, but a survey by One Big Switch found that four out of five people with health insurance say that they don’t switch funds because they think making the change will be too hard.

The truth is that switching health insurers is relatively easy, and something you can begin looking into now, even if you prefer to wait for the new tiered system to make your final decision.

Of course, there are some key factors you should consider when weighing up health insurance policies.

Will you have to serve waiting periods?

If you switch to a cover that includes services you weren’t covered for before, you’ll have to serve a new waiting period, but not if your new cover offers the same or fewer services than your old one.

Extras usually come with some waiting period when changing insurers, but many insurers offer to waive the wait for new customers as an incentive to sign up. Be sure to check the offers available when you’re planning to switch.

Do the extras suit your needs?

If there are benefits such as optical or dental health care that you use regularly, check that the limits cover you to the level you need. For example, some policies cover two dental check-ups per year, while others cover four, or limit the number of treatments per family member within a family that’s covered by the same policy, so make sure you understand exactly what will be covered.

Can you live with the limit?

Some insurers combine a range of services under a ‘combined limits’ rule on extras that means once you’ve hit the limit, even if it’s only on a single type of service within the range of services, you won’t be able to claim for any other services within that range that you may use.

Are the benefits caps acceptable to you?

Insurers typically set two types of caps on claims – a benefit limit that caps the amount a member can be refunded in a single year, and a benefit amount that caps the amount that can refunded on a single claim. Benefits amounts are expressed as a dollar amount or a percentage of the cost of a treatment.

Be certain that you’re prepared to shoulder any additional personal cost if you change to an insurer that has lower limits or benefits amounts.

Is the policy better tailored to your healthcare needs?

Some policies cover services that are likely to be of no use to most Baby Boomers, such as pregnancy-related treatments, while others have lower limits on items of greater importance to 60-pluses, such as optical care or hearing aids. When you shop around, ask any prospective insurer whether they have a policy that’s suited to your current needs, so you’re not paying for coverage you don’t want.

Does the insurer offer a direct debit or upfront payment discount?

Some insurers offer a discount if you pay by direct debit or pay your annual premium up front, which will help cut the cost of cover. For example, nib offers a 4 per cent discount on premiums for members who pay by direct debt.

And don’t worry about losing any prepayments if you decide to switch again in the future – insurers will refund you the unused portion of your payment when you move to another provider, possibly minus a small administration fee.

Will you lose your loyalty bonus?

So, if you’ve compared policies and decided to make the switch, how do you do it? Again, it’s not too difficult, and some insurers, such as nib, will even do the switch for you.

But if you’re doing it yourself, your first step is to obtain a detailed quote from your preferred insurer. If you’re happy with the quote, ask that your new cover only begins when your old cover is cancelled. The next step is to contact your previous insurer to ask it  to send you a ‘clearance certificate’ and an itemised claims statement – you should copy those for your own records, then send the originals to your new insurer.

Don’t forget to cancel the direct debit with your bank so you don’t continue to pay premiums on your old policy, and let your new insurer know that you want cover to start. It’s that easy!

Have you switched insurers recently? How did you find the process?