Switching Health Insurance

Why switch Health Insurance? 

Over 13 million Australians have private Health Insurance,¹ but many people don’t fully understand exactly what services and treatments they’re covered for. 

It’s well worth regularly reviewing your policy to ensure you’re getting great value for your hard-earned cash.  

These are some of the factors that may be a reason to consider switching policies or insurers: 

Lower premiums: While the Australian Government already contributes towards the cost of Health Insurance premiums in the form of an income-tested rebate,² you may still be able to lower your premiums simply by comparing insurers and switching to a more competitive or suitable policy.

Increased Extras limits: A limit is the maximum amount of money an insurer can contribute towards the services in your Extras cover, during a set period of time.³  

Insurers set their Extras limits themselves, and there are different types of limits such as annual limits, family or per person limits, lifetime limits or even loyalty limits. 

Once the benefit limit is reached for a particular service, your insurer won’t pay a benefit towards that service and you will need to pay the full cost of the service yourself.⁴ 

For example, if you’re maxing out your physio claims each year, then it may be time to find a policy or insurer that has a higher physiotherapy limit. 

Better customer service: Whether you prefer to speak to someone in person about your policy or you enjoy the convenience of submitting claims through an app, it could be worth comparing insurers to find a health fund that gives you the customer service you’re looking for. 

Do I need to wait until my current policy expires before I switch policies or health funds? 

No, you’re free to switch policies and or insurers at any time, as long as you’re up to date with payments for your current policy. 

The Private Health Insurance Act 2007 includes portability rules which helps protect you if you want to move to a different Hospital policy with the same insurer, or a different insurer.⁵ It means that you won’t have to wait the normal waiting periods again before you can make a claim and receive benefits.⁶   

If you have paid any premiums in advance, then you’re entitled to a refund from your previous health fund up to the starting date of your new policy. 

Does switching health funds affect my Lifetime Health Cover (LHC) loading status? 

As long as you maintain continuous Hospital cover, switching health funds will not affect your LHC loading.⁷ 

LHC loading was introduced by the Australian Government in 2000⁸ in order to encourage younger Australians to take out Private Health Insurance and therefore reduce the load on the public health system. 

If you haven’t taken out and maintained Private Hospital cover from the 1 July following your 31^st birthday, you will be required to pay a 2% LHC loading on top of your premiums for each year you were without for a maximum of 10 continuous years.⁹ 

3 things to do when switching Health Funds 

	Get a clearance certificate.
	Choose the start date for your new policy.
	See if you’re eligible for any refunds from your previous Health Insurer.

How do I switch Health Insurers? 

Switching health insurance doesn’t have to be complicated, and iSelect can help you take care of the process by walking you through the following steps: 

1. Call iSelect and have one of our friendly team members help you Compare insurers to see if there’s a policy from our range that better suits your lifestyle and budget. 
   
   
2. Ask questions and make sure you’re comfortable and happy with your new level of cover and that it suits your needs (which can change from time to time). 
   
   
3. Once you’re happy with your selection, our iSelect consultant will ask for your existing insurance policy details, to help facilitate the transfer. Your transfer certificate will be sent from your old fund to your new one, ensuring your waiting periods move across with you. There’s no need to cancel your existing insurance policy, that’s done as part of the transfer. 
   
   
4. By providing your iSelect consultant with your payment details, they’ll ensure your new policy is up and running on a date that you choose, and any payments to your old fund will cease after the transfer period of two weeks. If you’ve paid in advance, you’ll be reimbursed for any unused days from your old insurer. 
   
   
5. You’ll be emailed your new policy details, and the fund will post you a welcome pack with your new membership cards within 5-10 business days. 

Most insurers offer a 30-day cooling off period, which means if you change your mind in the first 30 days after joining and you haven’t made a claim on your new policy, you can ask for a refund of any contributions you have paid.¹⁰

Will I have to re-serve my waiting periods? 

The short answer is, no. 

If you’ve already served out the maximum waiting periods on your previous hospital policy, then you won’t need to re-serve them on your new one for the same services.¹¹ 

However, if you still have not fully served your waiting periods on your old hospital policy, then you’ll still have to serve out the remaining waiting period for your new policy.¹² 

You will also need to serve waiting periods for any additional benefits available on your new policy - meaning anything you are now covered for under your new policy which you weren’t covered for under your old policy.¹³ 

In essence, any waiting periods you’ve already served on your old hospital policy will transfer across with you to your new policy. 

Waiting periods vary for different Hospital services and must be no more than:¹⁴ 

• 12 months for pre-existing conditions 
• 12 months for pregnancy and birth-related services 
• 2 months for psychiatric care, rehabilitation, or palliative care (including pre-existing conditions) 
• 2 months for all other services 

Keep in mind that while insurers are not required to honour waiting periods when it comes to Extras cover, many do choose to do so but it’s also worth checking to find out what - if any - waiting periods will apply to your new Extras policy.¹⁵ 

Will I lose any benefits or loyalty discounts? 

Insurers generally set their own loyalty programs and discounts for Extras cover, so while you may lose something like a discounted gym membership from your old policy, your new insurer could offer you a discount with some of their own preferred providers such as optometrists and dental clinics. 

Some insurers may choose to honour age-based discounts such as the Australian Government’s discount for 18 to 29 year olds, which is a discount of up to 10 percent of their Hospital premiums.¹⁶ 

This is why comparing policies can be a real win – you won’t know what’s out there unless you compare! 

Will I lose my annual limits on Extras? 

Insurers set their own limits for Extras cover, which just makes comparing policies all the more worthwhile to help you find an Extras policy that will pay the most towards the services you actually use.  

Many Extras policies only allow you to claim either:¹⁷ 

• A certain percentage of costs for each service, such as 50% of the cost per dental treatment, or 
• A certain amount for the same service per year, such as cover for up to $500 per year for dental treatments. 

So while you may lose one type of benefit from your old insurer, you may find a more suitable one with another.  

For example, you may find that you need monthly visits to the physiotherapist, so you might want to consider choosing a policy that covers a set dollar amount each time you use the service, up to an amount of $500 per year, rather than a policy that only covers 50% per visit. 

Annual limits can be calculated based on the calendar year, financial year, or from the date you take out Extras cover, depending on your insurer. Another thing to check when comparing!  

Where can I compare Health Insurance? 

Looking back makes moving forward easy.  

If your Health Insurance needs (or your budget) have changed, then switching Health Insurance funds can be simple.  

For friendly and helpful advice on making the switch, compare our range of policies here, or call iSelect on 1800 784 772.

^{Sources:
1 Australian Government Department of Health and Aged Care - Private health insurance reforms
2 Australian Taxation Office - Private health insurance rebate
3 Ahm - What are Health Insurance Limits?
4 Australian Competition and Consumer Commission - Private health insurance, Gap and other costs when accessing benefits
5 Commonwealth Ombudsman of Private Health Insurance - The right to change, page 2.
6 As above.
7 As above.
8 Commonwealth Ombudsman of Private Health Insurance - Lifetime Health Cover
9 Australian Taxation Office - Lifetime Health Cover
10 Commonwealth Ombudsman of Private Health Insurance - The right to change, page 3.
11 Australian Government Department of Health and Aged Care - Waiting periods and exemptions
12 Commonwealth Ombudsman of Private Health Insurance - The right to change, page 4.
13 As above.
14 Australian Government Department of Health and Aged Care - Waiting periods and exemptions
15 Commonwealth Ombudsman of Private Health Insurance - The right to change, page 2.
16 Commonwealth Ombudsman of Private Health Insurance - Age-based discount
17 Australian Government Department of Health and Aged Care - Extras and ambulance cover}