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How to choose a health fund that works for you
When choosing private health insurance, shopping around costs nothing, but doing nothing can cost you. Private health cover helps pay towards hospital and medical fees not covered by Medicare. While the financial benefits and peace of mind gained are clear, understanding the variety of options on offer can seem overwhelming.
Make sure you ask the right questions when deciding on the right health fund. For example, which policy will most suit your needs, or the needs of your family? Do you need extras cover? Do government rebates apply?
We want to help reduce the headache of looking for the most suitable health insurance plans, whether you’re switching funds, or if it’s your first time taking out cover. If you’re wondering how to choose a health fund, it’s worth considering a few factors.
Your health needs and family history
If you’re wondering how to pick the most suitable health insurance plan, it all starts with your health. Understanding your medical needs and which services you’ll likely use will help narrow down your options.
Do you or your partner have any health conditions? Are there future plans, such as pregnancy or surgery that need factoring in? Your policy choice should also reflect your family’s medical history. Do your parents or grandparents suffer from genetic or hereditary conditions that may have been passed down to you?
Reasons to choose health insurance
If you’re experiencing any of the above conditions, choosing a health fund that provides relevant cover could ensure you save money in case issues arise as you get older. If you upgrade your policy later in life and you already show signs or symptoms, the condition will be labelled ‘pre-existing’, meaning you will have to serve waiting periods prior to the fund covering or paying any benefit towards that condition.
Are benefits paid per person or per policy
How your policy pays and limits its benefits is a crucial factor in choosing private health insurance.
For example, if an insurer’s extras policy has a set benefit limit of $1,500 for the family, then all members covered are restricted to that limit of $1,500. If your extras cover offers a $1,500 limit per person, then each individual can use a maximum of $1,500 in benefits.
Benefits per person vs benefits per policy
Extras cover and your policy
Extras cover allows you to tailor your health insurance to your medical needs and budget. It can include dental, physiotherapy, ambulance cover, and optical services.
When choosing health insurance, consider whether it’s worth investing in extras cover. While you can purchase this separately, most health funds offer packaged health insurance options which include both hospital and extras combined.
For a family with kids that make regular trips to the dentist or optician, it’s certainly worth comparing health insurance plans and their tiered coverage to ensure your family’s health is looked after. However, a young single who doesn’t go to the physiotherapist, and doesn’t need glasses, may not see any value in taking out extras cover.
Extras health cover can be great value if you’re using the services to their full potential. Check for a HICAPS offering. When booking treatment or care, this option allows you to make immediate claims. If you put off claiming until a later date, you risk forgetting.
Look out for excess payments
An excess is paid only if you make a trip to the hospital. When first joining an affordable health insurance fund, you can agree on an excess with the total insurance cost accordingly higher or lower depending on your monthly premium. This means if you choose a lower monthly premium, you’ll have a higher excess.
Your excess payments can range from zero to $1,000, depending on the policy. The more excess you agree to contribute, the lower your health cover payments will be. The maximum number of times an excess is payable per year changes, depending on your policy.
Before you’re covered by your health insurance plan, you may first need to serve waiting periods. One way to increase your chances of avoiding waiting periods is to switch to a comparable health insurance policy.
For a first-time purchaser, the waiting period can range from two months for benefits on dental and optical, to 12 months for major dental and obstetrics. During this time, you won’t receive benefits for certain treatments, or you could be entitled to lower benefits.
For example, obstetrics cover has a 12-month waiting period, so be sure to factor this in when planning a pregnancy.
It’s important to be realistic about your budget. All health insurance funds offer a scaled range of hospital covers from public, to medium, to comprehensive. While the most comprehensive policy available will give you the most protection, it does have to balance with what you can afford. Ideally, most people look for a policy that pays out more in annual benefits than their premium costs for the year.
Health insurance doesn’t have to be a burden. The Australian Government offers several initiatives to help provide financial support.
Designed to encourage all Australians to take out hospital insurance earlier in life, these initiatives include the Australian Government Private Health Insurance Rebate, the Medicare Levy Surcharge and Lifetime Health Cover loading (LHC)1. Under LHC, if you take out affordable health insurance before you turn 31, you avoid a 2% loading on top of your premium each year to a maximum of 70% 2.
For example, a 40-year-old who takes out insurance for the first time will pay 20% more than someone who first took out hospital cover at age 30.
Assess your options
Now you understand the different inclusions in policies, the excess you’re comfortable with and your budget, it’s time to start comparing health insurance plans. Comparing with iSelect can help you find a healthcare provider that suits your needs.
For more information on how to choose a health fund, call us on 13 19 20.
1. Australian Securities & Investments Commission
2. Private Health.Gov
iSelect does not compare all products in the market. Not all products are available at all times.