Private health shakeup: Government details rules for new ‘tiered’ health cover

The government has released details of the new ‘tiered’ health insurance system that separates 70,000 private health policies into Gold, Silver, Bronze, Basic and Clinical categories.

The new system, set to come into force from April 1 next year, will make it easier for Australians to see what they’re getting from their health cover.

Health Minister Greg Hunt said the new rules will give Aussies easy-to-understand clinical categories and a simple classification system, but won’t impact the cost of private health cover overall. 

Under the new regulations, private health insurers will be forced to provide customers with clear information that allows them to compare different insurance policies using a standardised system. The tiered system will categorise existing policies into Gold, Silver, Bronze and Basic classifications.

Customers won’t be forced to change their existing policy cover if they’re happy with it.

The government previously announced a series of reforms across the private health sector, with Hunt saying the changes will provide greater access to mental health services and allow Australians to upgrade coverage without waiting periods.

Those living in rural and remote areas are set for more support, as insurers are now able to offer travel and accommodation as part of hospital treatment cover.

But while young Australians aged 18 to 29 will benefit from premium discounts of up to 10 per cent – which they will be able to keep until they turn 40 – which could translate to saving $200 each year on a $2,000 policy, there are no specific discounts for seniors.

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With the new rules in place, insurers can start implementing the new product tiers before April 1. All new insurance policies will be categorised under the new system from next year and by April 2020, all insurance products will be required by law to fully comply with the new arrangements.

Hunt said 50 per cent of the population has private health cover and the new rules will allow Aussies to easily find the cover that best suits their situation. The tiers each have minimum and standard clinical categories, meaning consumers can easily identify services that are or aren’t included by their policies.

The Basic and Bronze covers are the more affordable options and will allow consumers to access key health services, while Silver and Gold policies provide more comprehensive cover. Insurers can also offer additional cover to minimum requirements. In these cases, cover would be named Basic Plus, Bronze Plus or Gold Plus.

Under the new rules, all insurers will include mandatory information about what each policy covers. And, for the first time since 2001, consumers will be able to choose lower premium prices for higher excesses.

The move has been praised by Private Healthcare Australia, with Chief Executive Dr Rachel David acknowledging the changes will make it easier for consumers to choose and use their health cover.

Read more: The big myths about health insurance and why they could cost you

“Australian consumers have asked for a PHI system which is easier to understand and more transparent and the Gold, Silver, Bronze, Basic classification system will deliver that,” David said. “The system is designed to reflect as much as is possible the spread of products already in the market, however it will eliminate features of the system that consumers have found confusing, improve transparency and make it simpler for consumers to use their PHI.”

More than 13.5 million Australians hold private health cover – many with incomes less than $50,000 per year.

“Many of these are full pensioners are superannuants who are making considerable sacrifices to maintain their health cover,” David added.

“Health funds have worked with the government and private health stakeholders for more than two years to deliver PHI reforms. In doing so we have gone through health fund products line by line to ensure we are keeping the balance of affordability and value for money for consumers choosing private health”.

Do you have private health insurance? Do you think the new tiers will make it easier to understand?