What do you need to know about private health insurance?

Key points

• Private health insurance offers you a sense of choice in the healthcare you do receive and a greater scope of support
• Through regular private health insurance payments, you can generally avoid the big price-tag that comes with surprise health issues
• Not all health insurance policies are the same and it’s important to find one that suits your needs

Health is a topic that we begin to seriously consider as each year passes and we find ourselves ageing.

It doesn’t help that the language used to describe our options for support and healthcare seems to change or seems too confusing to keep up with.

Private health insurance offers many Australians, young and old, peace of mind as it may provide an additional safety net when Medicare can’t cover you.

What is the difference between Medicare and private health insurance?

Australia’s public health system, Medicare, offers free public hospital care, along with public access to tests and consulting for some specialists, but this often comes with long waiting lists and without the ability to choose who is treating you.

Medicare does not cover elective surgery, such as hip replacements, cataract surgery or hernia repair, for instance.

In general, there are three types of private health insurance:

Hospital cover insures you for the costs of visits, surgeries and extended stays in the hospital. For those seeking, or with existing, hospital cover insurance policies, co-payments can be charged by insurance funds to bill the visitor as a variable fee (typically per night in hospital) or through excess payments as a fixed rate fee (up-front fee, with the insurer covering the rest).

General cover (which is also known as ‘ancillary coverage’ or ‘extras’) insures you for specialist healthcare, such as dental, physiotherapy or optical care.

Ambulance cover insures you for emergency ambulance services to the hospital, which ensures that you can receive immediate care and transport without paying the full fee.

Older Australians may feel that by paying for private health insurance, they have faster access to the treatment they need and reduced bills for the care they receive, as their coverage can offset the cost.

Sounds simple enough, right?

Once you have decided that private health insurance would benefit your quality of life over time, it’s important to review your budget, pre-existing conditions and what level of coverage is suitable for you.

If you have an existing health insurance policy, it may be worth reviewing the terms and whether you would like to rework them to suit your monetary, lifestyle and health needs.

Some coverage plans may include insurance for extras, such as pregnancy, which no longer reflect the coverage needed for men and women in your age bracket.

For information about the biggest health conditions and concerns for men and women over 60, along with an overview of concerns for older Australians, Aged Care Guide offers comprehensive articles detailing what you should consider.

Through talking with your trusted healthcare professionals, it’s possible to assess what you should prepare for and the resources available to avoid spending money needlessly.

Additionally, for existing insurance policies which you may have for a specific level of healthcare coverage or alternatively, home, care and contents insurance, it could be useful to ask your provider whether they offer discounts on bundling policies.

Bundling insurance policies (also known as ‘combined policies’) means grouping separate insurance packages in your life to suit your needs.

Thinking about changing policies?

The cost of private health insurance depends on your level of coverage, along with the premiums you will pay in the policy itself, as premiums are different across each different fund.

If you would like to switch your private health insurance policy, it’s important to be wary of waiting periods or restrictions, along with any pre-existing conditions which may not be covered at the start of entering into a new policy.

Waiting periods in insurance policies mean that you may have to pay the lump sum for elective surgeries or treatments which are specific to your condition, if you have only been with the new policy provider for a short time. Waiting times and their duration may differ, as outlined in the terms of your insurance agreement.

For example, Bupa offers a 3-year waiting period prior to an insurance claim for laser-eye surgery for a pre-existing condition, whereas the waiting period for psychiatric and rehabilitation hospital care is only 2-months.

Waiting periods exist so that insurers don’t pay for a pre-existing condition which requires costly treatment, only for the policyholder to end their policy and force the insurer to raise premiums for other policyholders to recover the cost.

Through pre-paying for your insurance, you may be eligible for a reduced premium rate or have the chance to lock-in to an existing rate prior to an increase in fund costs.

It’s also important to check whether your existing or new policy includes gap cover, which is coverage for the difference between what your insurer pays and what you may be charged for healthcare.

For seniors in particular, age-based restrictions should be carefully reviewed, as existing policies that have provided coverage for your treatment in the past might have a limit.

Deciding whether a private health insurance policy is right for you in the present may not cover the long-term coverage that you need.

It is important to do your research and compare providers, your budget, policies and whether your existing healthcare plan will cover you in 5 years time.

If you are left feeling confused about what the future holds and how to prepare for it, please consult your insurance provider or have a chat with your general practitioner (GP) to discuss how you can stay financially and personally well. 

When was the last time that you reviewed your private health insurance policy? Has this article encouraged you to look it over?

Related content:

Health concerns for women over 60 years old

Planning for a secure retirement

Regular health checkups: What should you be getting at 65+?

Benefits and entitlements for retirees and seniors