By now, most Australians are aware that some pretty big changes are coming to private health on April 1.
Aside from the new Gold/Silver/Bronze/Basic tiered model, private health insurance premiums will rise yet again, this year by an average of 3.25 per cent. Average premiums have increased by 26 per cent in the past five years and in most cases, incomes have not increased to match this.
The ageing population is one of the reasons behind the increase and there are less young people to balance it out, while improvements in medical technology mean that the latest and best treatments are being used to treat serious health issues.
Most people on a singles policy will pay an additional $62 a year under the changes, while couples policies will increase by an average of $151 annually. Some people will notice their policies go up more or less, with some insurers increasing premiums by as much as 5.91 per cent, and others as little as 1.64 per cent. Policy holders will be contacted by insurers prior to April 1 about these changes, but it can still be a confusing time while Australians adjust to the changes.
Laura Crowden, Corporate Affairs Manager at iSelect, tells Starts at 60 that 2019 is also significant because as part of the government’s reforms, a new Gold/Silver/Bronze/Basic product tier will be introduced for all hospital policies, intended to make it easier for customers to compare policies in the long run. There are minimum standards for hospital services and treatments that will be covered under each tier, but it does mean some policy holders will notice changes.
“At the moment, one insurer might call a policy silver and so might a different insurer but they include totally different things,” Crowden explains. “Now it will make it much easier. For example, silver policies must cover heart conditions so they can know as long as they’re looking at any silver policy from any insurer, heart conditions will be covered. All gold policies, for example, are going to need to include cataracts now.”
Most over-60s will be looking at gold and silver policies and it’s important to know about individual health needs and what’s going to be covered under each policy to ensure you’re covered by the best policy for you. For example, the must-haves for one person may all be covered under a Silver policy, whereas other health needs will only be covered through Gold cover.
From April 1, all Silver policies will include treatment for the heart and vascular system, lung and chest, blood, back, neck, and spine, plastic and reconstructive surgery (medically necessary), dental surgery, podiatric surgery (provided by an accredited podiatric surgeon) and implantation of hearing devices.
Gold on the other hand includes all this in addition to treatment for cataracts, joint replacement, dialysis for chronic kidney failure, weight loss surgery, insulin pumps, pain management with device and sleep studies. Both Gold and Silver also include all the benefits of the Bronze and Basic policies.
“It can be worthwhile talking through that with a health insurance expert and they’ll help you understand whether your health needs sit within the Silver or Gold and obviously there’s a price difference there,” Crowden says.
It’s also important to know that individual members on a couple’s policy don’t have to be on the same policy level. One person may require a Gold policy, but the health needs of the other person in the relationship may be met with a Silver policy.
While it will make it clearer for people to know what is covered, it will mean that some people will no longer be covered for things they previously were, or may find that they now have additional cover. As such, it’s vital to know how the policy is changing as a result of the new tiers and to talk to insurers about the best policy. You are never locked in to a policy, so can always change from one to another at any time.
“Insurers will be contacting their members to advise them of any changes and it’s really important that people keep an eye out for that communication, make sure they understand the changes and that they’re happy with them,” Crowden says.
A lot of insurers are contacting customers via email and online portals, rather than through letters in the post. It’s important to be aware of this communication so people fully understand the changes impacting their policy.
While Medicare will continue to cover patients for emergencies, private health is still important when it comes to elective procedures. These can include everything from cataracts to hip and knee replacements which aren’t currently considered life-threatening conditions.
“It’s the ability to be able to be seen quickly for those elective procedures, to choose the hospital and to choose the doctor,” Crowden says of the importance of private health cover. “Whereas if you had to rely on the public system for those kind of operations or medical issues, you would eventually be seen but it could take a really long time.”
Higher maximum excesses to reduce premiums will also be introduced on April 1. The maximum excess increases from $500 to $750 for singles and from $1,000 to $1,500 for couples and could save people on their policies.
“If you’re opting for a higher excess, you could save up to $350 a year on a couple’s policy,” Crowden says. “That’s probably more relevant to older people who are still in really good health and not expecting to go into hospital a lot. By opting for a high excess, they could bring down the cost of their premium.”
The other big change is most natural therapies will no longer be covered under extras policies. While insurers will still be able to cover remedial massage, acupuncture and Chinese medicine as part of extras policies, natural therapies including naturopathy, aromatherapy, homeopathy, Pilates and yoga will no longer be covered.
“I think the main thing would be directly for the Boomers to really make sure exactly what they’re covered for and take the time to check they are on the right policy,” Crowden says. “Especially that they’re not paying more than they need to.”
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.