How Private Health Insurance Is Changing In Australia

New policy tiers for hospital products

Starting 1 April 2019, private hospital insurance products will be categorised into four tiers of cover¹:

• Gold
• Silver
• Bronze
• Basic

The new classification system will enable you to see exactly what’s covered under each tier, and make it easier for you to find the right cover to suit your needs. The requirements for each product tier are minimum standards, with the system specifically designed to allow the majority of existing policies to be transferred into the new product tiers.

The new four-tiered system will be of particular benefit to women, with breast cancer treatment and gynaecological services included in all Bronze tier hospital treatment products, and all higher level policies.

Private health insurance reforms and mental health

If you require access to mental health services, the new reforms will make it easier for you to upgrade your cover. For example, you’ll be able to access in-hospital mental health services as there will be access to a once in a lifetime immediate upgrade with no waiting period, if you're transferring from a policy that has it covered as a minimum benefit.

Some rules have already taken effect. Since 1 April 2018, the limits on the number of mental health sessions or treatments you can receive has been removed². It’s hoped that by removing limits patients will receive an improved level of care, and be more inclined to take out private health insurance.

How the private health reforms will affect younger Australians

From 1 April 2019, insurers will be able to offer premium discounts on hospital cover of 2% for each year that a person is aged under 30 when they first purchase hospital insurance. This will be up to maximum of 10 % discount off their annual premiums. The discount applies as long as the member stays on a discounted product until that person turns 41, and then the discount gradually phases out by 2% per year³.

The provision of discounted products by insurers will be voluntary, however, if an insurer does decide to offer discounts, they must offer that discount to all eligible holders of that product, including new and existing policy holders.

The discounts are designed to make private health insurance more affordable for younger Australians, and encourage them to take out cover.

Higher excess levels for lower premiums

Under the new reforms, your insurer will be able to offer you products with higher excesses in return for lower premiums⁴. This will give you greater choice, and help reduce the rate of private health insurance price increases.

If you’re single, taking out a premium with higher excesses could save you up to $200. If you have a family, you could save up to $350. The maximum permitted excesses for private hospital insurance will be increased from $500 to $750 for singles, and from $1,000 to $1,500 for couples/families.

Private health insurance reforms and natural therapies

One of the biggest changes to take place as a result of the reforms involves natural therapies. From 1 April 2019, the following natural therapies will no longer be covered under your general treatment policy⁵:

• Alexander technique
• Aromatherapy
• Bowen therapy
• Buteyko
• Feldenkrais
• Herbalism
• Homeopathy
• Iridology
• Kinesiology
• Naturopathy
• Pilates
• Reflexology
• Rolfing
• Shiatsu
• Tai chi
• Yoga

This reform comes on the back of a review chaired by the former Commonwealth Chief Medical Officer, which found that there is no clear evidence to support the efficacy of the listed natural therapies.

Although you can still access these natural therapies outside the private health insurance system, it’s hoped that removing these natural therapies will reduce the cost of premiums, and increase the number of people taking out private health insurance.

Private health insurance and treatment in rural areas

From 1 April 2019, insurers will be able to offer travel and accommodation benefits under hospital cover⁶.

Although it won’t be mandatory for private health insurers to offer this benefit, it’s great news if you live in regional or rural Australia, and need to travel to larger cities for specialist medical and hospital treatment.

It’s estimated that approximately 50% of private health funds currently offer benefits for travel and accommodation, however in most cases, it can only be claimed if you have top level general treatment (extras) cover.

The new reforms will enable more policy holders to access these benefits, and will improve the level of healthcare offered to policy holders living in regional and rural areas.

Need some help understanding health insurance?

Finding the right health insurance policy for yourself or your family can be confusing, and overwhelming. At iSelect we keep things simple. Compare health policies side by side online, or call us on 1800 784 772 today.

Sources:
1. http://www.health.gov.au/internet/main/publishing.nsf/Content/private-health-insurance-reforms-fact-sheet-gold-gilver-bronze-basic-product-categories
2. http://www.health.gov.au/internet/main/publishing.nsf/Content/private-health-insurance-reforms-fact-sheet-supporting-mental-health
3. http://www.health.gov.au/internet/main/publishing.nsf/Content/private-health-insurance-reforms-fact-sheet-discounts-for-18-to-29-year-olds
4. http://www.health.gov.au/internet/main/publishing.nsf/Content/private-health-insurance-reforms-fact-sheet-increasing-maximum-excess-levels
5. http://www.health.gov.au/internet/main/publishing.nsf/Content/private-health-insurance-reforms-fact-sheet-removing-coverage-for-some-natural-therapies
6. http://www.health.gov.au/internet/main/publishing.nsf/Content/private-health-insurance-reforms-fact-sheet-improved-access-to-travel-and-accommodation-benefits-for-regional-and-rural-areas