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FREQUENTLY ASKED QUESTIONS
What are the benefits of private health insurance?
Who supplies health insurance products?
How safe are health insurers?
Will I have hassles getting the cover I want?
What cover is available?
What does it cost?
How do I choose?
How do I get value from private health cover?
Can I avoid gaps in cover?
Is it better to insure as a couple or as two singles?
What should be done if you plan to have a baby?
What are the options for single parents?
How does Ozecover make it's money?
Are premiums different through Ozecover?
What are the benefits of private health insurance?
More than half the population of Australia - over 11 million people - have private health insurance, to add benefits to their cover under Medicare.
The main reasons people give for buying private cover are to reduce waiting times, to choose their own doctors in hospital, and for general peace of mind.
The Commonwealth Government also offers valuable "sticks and carrots". These include tax rebates of 30% of the premiums (more if you are over age 65). If you have suitable private hospital cover, you also avoid a 1% extra Medicare Levy Surcharge and you establish an entry age that limits your future premium loadings under the rules of Lifetime Health Cover.
Who supplies health insurance products?
In June 2009, there were 37 organisations registered to offer private health insurance in Australia.
Of the 24 health funds open to anyone who wants to join, 15 are not-for-profit mutuals themselves, 7 are subsidiaries of not-for-profit mutuals, and 2 (Medibank Private is owned by the Commonwealth Government, and NIB is owned by private shareholders) are companies paying dividends to their external investors.
Of the 13 health funds restricted to people in particular industries, all are not-for-profit mutuals.
How safe are health insurers?
All private health insurers in Australia are regulated by the Commonwealth Government, under the Private Health Insurance Act 2007.
The finances of all the insurers are monitored by the Private Health Insurance Administration Council, known in the industry as PHIAC. Every fund must file regular reports on its solvency and capital adequacy, and PHIAC has powers to intervene with any insurer that has problems.
PHIAC publishes a report every year on the finances of every health insurer, and this document is available for analysis and comment by anyone.
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Will I have hassles getting the cover I want?
You have the right to join the health fund of your choice or switch at any time from one fund to another without penalty, no matter what your age or state of health. There are a few health funds that cater only to people working in particular industries, but most funds are open to anyone who wants to join. The database used by Ozecover includes the products of EVERY health fund, and our Quick Quote facility compares ALL products we consider could be suitable for you and your family, depending on the State where you live, the cover you want, what restricted funds might cater to you, and other information you indicate in the information you give in the Quick Quote.
By law, every health fund must comply with the rules of community rating, which means you cannot be denied access, refused cover or charged extra because of your age (except for Lifetime Health Cover), gender, health or family status. The rules also give you the right to move from fund to fund without losing benefits or accumulated rights.
Under Lifetime Health Cover, loadings based on your age at entry are added to your premiums for hospital cover. There are no loadings at all if you join before you are aged 31, or are born before 1 July 1934, and any loadings you have to pay cease after you have kept your hospital cover going for 10 years. These Lifetime Health Cover rules are designed to encourage people to start hospital cover early and to keep it going on a long term basis.
There are also rules about maximum waiting periods for benefits. You can be made to wait for up to two months before any cover starts after you first join a fund, and you can be made to wait for up to 12 months before you are covered for "pre-existing" conditions. These rules are the same for all health funds, but some health funds occasionally waive their waiting periods as part of their marketing for new members.
Sometimes "extras" products have waiting periods of more than 12 months for certain benefits (eg for expensive dental procedures), but these long waiting periods must apply in the same way for everyone who buys the products.
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What cover is available?
There are two basic kinds of private health insurance available in the market - hospital cover and general (sometimes called ancillary or extras) cover.
Hospital cover provides benefits when you go to hospital as a private patient.
Whether or not you have private cover, you can if you wish go as a Medicare patient to any PUBLIC hospital (a hospital operated by the government) and be treated by a doctor appointed by the hospital. As a Medicare patient, you will not be charged, and you will wait in turn with other Medicare patients unless your situation is considered an emergency.
Instead, you can choose to go as a private patient to ANY hospital (public or private). You then have the right to choose the doctors who treat you, and you can often avoid going on a long public hospital waiting list.
Private patients must pay for accommodation and treatment and, usually, only some of the charges are claimable under Medicare or other government schemes. Private hospital cover is designed to help with the extra costs you incur when you go to hospital as a private patient.
There are various hospital covers available in the market. Some are designed for people who expect frequent or large private hospital expenses and who want generous benefits. Others are better for people who are rarely in hospital and who are willing to pay occasional private hospital costs directly as a trade-off for paying lower private health premiums on a regular basis.
There are also various general (ancillary or extras) covers, which provide benefits for health services from dentists, opticians, chiropractors and physiotherapists and similar. Many of these services are not reimbursed at all by Medicare, so private coverage is the only insurance option.
Medicare does provide reimbursement for the services of doctors, both GPs and specialists, but the "gaps" between doctors' prices and the amounts reimbursed can be large. By law, private health insurance may not cover the "gaps" in doctors' charges except under hospital cover.
What does it cost?
Private health insurance is not cheap, and full cover for a family can cost as much as $3,000 to $4,000 a year. However, there are a number of ways of reducing these costs.
Firstly, the Commonwealth Government provides a rebate as a proportion of the total premiums paid for appropriate private health insurance. The proportion is 30% if the oldest person covered is less than 65 years of age, 35% if they are between 65 and 70 years of age, and 40% if they are over 70 years of age. This rebate is available even if you do not pay income tax. Your health insurer will claim the rebate on your behalf, and will bill you just the net amount. Your insurer will also adjust the rebate (thereby reducing your net premium) as you pass the age thresholds for the higher rebates.
Secondly, if you have a taxable income above a threshold amount - $73,000 a year for individuals and $146,000 a year for families - you must pay a 1% Medicare Levy Surcharge. However you can avoid this tax with suitable private hospital cover and, if you do so, the reduction in your tax is worth at least $730 a year for individuals and at least $1,460 a year for families.
These two Government incentives are added together. For example, if you are a single person under 65 years of age earning a taxable income of $110,000 a year, a premium of $2,000 a year for private health insurance will attract a rebate of $600 (ie 30% of the premium) and, if it includes suitable hospital cover, will eliminate your Medicare Levy Surcharge of $1,100 (ie 1% of $110,000), leaving a net cost to you of $300 a year.
Thirdly, if you are basically a healthy person and rarely go to hospital, then you can avoid cover which is too expensive for your needs and which you are unlikely to use, and you can reduce your premiums with deductibles, copayments and exclusions.
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How do I choose?
There are thousands of products on the market, and sorting through them is a difficult task even for experts.
The Quick Quote facility on this website is designed to help you sort through all the different products, based on the information you tell us about yourself and your family.
To get good value for money, the product you select is more important than the particular insurer you choose. The primary decision for you to make is about hospital cover. In most circumstances, the Quick Quote will suggest to you a list of hospital insurance covers from ten different insurers sorted in order of price.
Once you have decided what to do about your hospital cover, you can think about whether it is worthwhile for you to pay more to get the extra benefits of general cover too. It does not make sense to spend more on extra premiums than you do on the health services they cover, many of which are routine day-to-day costs.
We suggest you make your primary decision about the hospital cover you want and, if you decide to buy, you may be able to apply directly through this site, because some have direct electronic linking to Ozecover. If you think you might benefit also from adding general cover to your hospital cover, we suggest you discuss this directly with the Fund you choose.
How do I get value from private health cover?
It depends on whether you are likely to be a high claimer or a low claimer.
For high claimers - people who are frequent users of expensive private health services such as prostheses, cosmetic surgery, orthodontics, IVF treatments - even the most expensive private health insurance products can be good value so long as the benefits exceed the premiums.
If you are likely to be a low claimer, health insurers will consider you a very valuable customer and competition for your business is fierce. This means you can save real money by choosing wisely.
There are a number of methods health insurers use to offer value to low claiming customers - the main ones are described below.
- Deductible (sometimes called a front-end deductible or excess) –you pay some of the total cost yourself and the insurer pays out after that. For example, with a deductible of $500, will you pay the first $500 and the insurance benefits contribute to the balance. Hospital products with a deductible of more than of $500 per person or $1,000 per family do not qualify for avoidance of the 1% Medicare Levy Surcharge on high taxable incomes. Ozecover does not suggest these non-qualifying hospital products.
- Co-payments (sometimes called moieties) - you make contributions towards the cost of items which you claim, and your insurance pays the balance of the cost. For example, you may pay $50 a day towards your accommodation in hospital and your insurance benefits start after that. Copayments may be used without restriction on hospital products that qualify for avoidance of the1% Medicare Levy Surcharge. However, Ozecover does not suggest products where the copayments add up to more than $500 for accommodation any hospital admission.
- Exclusions - these exclude cover for specified treatments. Common exclusions available are for items like childbirth and IVF, for cosmetic surgery and for expensive orthopaedic procedures such as hip and knee replacements. Accepting exclusions can be a useful way of reducing premiums for people who, because of their circumstances or age, are most unlikely to want the excluded services. Ozecover does not suggest products that have exclusions for cardiac procedures.
- Benefit limits - restrict the maximum benefits an insurer will pay for particular services or in total. There are such limits on most private health insurance products to deter customers with frequent or sizeable claims and to help keep premiums down for low claimers.
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Can I avoid the gap in cover?
If you go to hospital as a private patient, there can be unexpected gaps between the charges you incur and the benefits you get from Medicare and from your private insurance. These gaps can be very substantial.While it is useful to learn about gaps at the time you take out your cover, the most important time to check the situation with your health fund is when you learn you are likely to be admitted to hospital. This is because the arrangements between different health funds and various hospitals and doctors are continually changing and are often renegotiated, and the situation may change between when you first take out your private health insurance and when you claim for an admission to a private hospital.Gaps in hospital cover can arise from the policies of the hospital itself and of the medical practitioners that use that hospital.If you ask, your insurer will provide you with details of hospitals where they have arrangements to avoid or restrict gap charges. Before you go to any particular hospital, it is a good idea to contact your insurer and double check the situation. You may choose to exercise your rights as a consumer to choose another hospital.Of course, if you have a deductible or copayments on your cover, you will have to pay those costs even if there is an agreement between your insurer and the hospital. However some hospitals will waive these too, so it is at least worth asking the question.Doctors in Australia are free to charge whatever fees they believe are appropriate for their private services. However, many doctors also have arrangements with hospitals and with health insurers to limit the gaps between their fees and the amounts recoverable from Medicare and from private insurance.Again, it is prudent to ask your doctor about charges, for the doctor’sown services and also for those of any specialists (such as surgeons, anaesthetists and radiologists) that may be involved in your care.You will not be charged more if you ask, and you may be charged less.
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Is it better to insure as a couple or as two singles?
If you do not want cover for dependent children, you and your partner might consider insuring separately as singles instead of as a couple.
Some insurers offer a discount for couples, so that can be a consideration, but the discount is usually quite small. Other insurers charge the same for a couple as they do for two singles taking out the same product.
If you insure as two singles, you have the flexibility to buy separate products reflecting the different needs and circumstances of each person.
Also, if you choose cover with a deductible, it can be better to have separate deductibles at the single level (for example, $500 each) rather than one common deductible at the corresponding couple level ($1,000). Some insurers charge the full deductible if just one person makes a claim.
Details of discounts for couples, and how deductibles and other features work with a shared policy, are things you should ask the insurer when you apply for a policy.
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What should be done if you plan to have a baby?
We suggest you consider cover both for you and for your baby.
For you, we suggest you check there is no exclusion for pregnancy, childbirth, obstetrics or similar on your private hospital cover. Most health funds will not pay full benefits for childbirth until you have held your insurance for 9 months or 12 months, so we suggest you have your hospital cover in place at least a year before you plan to have your baby.
If you have singles only cover or couples only cover, usually insurers will not pay benefits for children, even for newborn babies, but they will allow you to upgrade to family cover while you are pregnant so your baby will be covered too. You should check this with your particular insurer.
If you already have couples cover, you may as well upgrade to family cover as soon as you start thinking about having a baby, because very often there is no extra cost.
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What are the options for single parents?
You can choose to purchase single cover just for yourself and avoid the extra cost of private health insurance for your children. This is the most economical option available and offers the benefits under lifetime health cover and enables you to avoid the 1% Medicare Levy Surcharge.
Healthy children are generally very low users of private health care and many parents are content with using Medicare coverage and, if they need private health services for their children, paying for it directly without medical insurance.
If you want private health cover for your children as well as for yourself, but not for an adult partner, some insurers offer discounted rates for single parents. The discount is usually between 15% and 25% on the full family rates.
Single parent cover is an economical option if you are planning to have a baby and you want private health insurance for the mother and children, but not for the father. Newborn babies do sometimes need very expensive health care, especially if they are premature.
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How does Ozecover make it's money?
Some websites are paid large commissions for selling health insurance, and show products only from the insurers that pay them.
Ozecover includes every insurer and checks every product for which we can get the information. It is our philosophy to cater for consumers who want to do genuine comparison shopping and who want to make informed choices.
Some health insurers have agreed to provide electronic links to the Ozecover website so you can apply for their products directly without further hassle if you want to do that. However many consumers prefer instead to select a short list of funds and products and ask for someone to email them or phone back, to discuss their options in person, and some health insurers have agreed to cater for that too.
Insurers that have direct links with the website, or who agree to respond to requests for contact that come from Ozecover, pay us referral fees of 2.5% of the premiums for the business they get this way.
Our business model is deliberately based on low costs and high volumes. We hope eventually to have agreements with most if not all the health funds, and to obtain wide support from consumers for this website. Any fees we receive for links with the website do not affect the suggestions we make to you or the premiums you pay. We are dedicated to providing consumers with access to the whole market and, in framing our suggestions, we match your Quick Quote responses to the products of every insurer at the best prices we can find.
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Are premiums different through Ozecover?
You pay the normal premiums like everyone else.
Ozecover provides the cheapest way for health funds to sell their products - no advertising costs, no upfront sales commissions, no large overheads - just factual information and price comparisons.
If you buy through Ozecover, the price you are offered should always be at least as good if not better than you can get any other way.
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If you are thinking of buying from a site that offers
you only limited choices, ask yourself:
WHY?