Ten Tips for Comparing Health Care Policies
By Liz Ernst
Australians already know that health coverage can provide security for individuals and families when a medical need arises. Many, however, do not know how to find the best value when comparing health insurance policies.
Below are 10 tips everyone should read before shopping for private health coverage.
1. Choose coverage that concentrates on your specific health needs, or potential health needs.
The first thing you should do before comparing your health plan options is determine which policy features best fit your needs. A 30-year-old accountant, for instance, is going to need very different coverage than a 55year-old pro golfer, or a 75-year-old retired veterinarian. By understanding the health needs that most often correspond to people in your age and activity level group - your life stage - you can save money by purchasing only the coverage you need and avoid unnecessary services that aren't relevant. For instance, a young family with two small children isn't going to need coverage for joint replacement or cataract surgery. A 60-year-old school teacher isn't going to need pregnancy and birth control-related services.
Whether it's high level comprehensive care you're after, or the least expensive option to exempt you from the Medical Levy Surcharge while providing basic care coverage, always make sure you're comparing health insurance policies with only those services that make sense for you and your family.
2. Consider options such as Excess or Co-payment to reduce your premium costs.
When you agree to pay for a specified out-of-pocket amount in the event you are hospitalized, you sign an Excess or Co-payment option that will reduce your health insurance premium.
If you choose the Excess option, you agree to pay a predetermined, specific amount when you go to hospital, no matter how long your stay lasts. With a Co-payment option, you agree to pay a daily sum up to a pre-agreed amount. For example, if Joanne has an Excess of $250 on her medical coverage policy and is admitted to hospital, regardless of how long her stay turns out to be, she will pay $250 of the final bill. If Andrew has signed a $75x4 Co-payment with his provider, he will pay $75 per day for just the first the first four days of his hospitalization.
For younger individuals who are healthy and fit with no reason to expect to land in hospital any time soon, either of these options are great ways to reduce the monthly cost of your medical insurance premiums.
Keep in mind that different private insurers have their own rules when it comes to Excess and Co-payments, including how many payments you will need to make annually on either option. It is important to read the policy thoroughly and ask questions in advance in order to have a clear understanding of what you are paying for, and what you can expect coverage-wise in the event that you are hospitalized. Also, make sure you choose an Excess option greater than $500 if you're purchasing an individual policy, or $1,000 for family coverage, in order to be exempted from the Medicare Levy Surcharge.
3. Pay your health insurance premium in advance before the cost increases.
Each year insurance providers increase their premiums by approximately five percent sometime around the first of April, a practice approved by the Minister of Health. By instituting these annual increases, your health insurance provider retains the ability to fulfill their obligations to policyholders despite increasing medical costs.
Most private medical policy providers allow policy holders to pay for one year's premium in advance, which locks them into the previous year's rate for an additional 12 months - a great way to save money. In order to take advantage of the savings offered, most insurers require payment in full be made within the first quarter of the year, between January and March.
4. Lock in to low cost health insurance at an early age.
The most obvious advantage any Australian can take when it comes to saving money on your insurance premiums is to buy in early to the least expensive rate available. And by early, we mean before age 31. Everyone who is eligible for Medicare will receive at least a 30 percent rebate from the government on the price of their health care premium, no matter what age you are. However, by purchasing hospital coverage before the July first following your 31st birthday, you can be ensured the lowest premium rate available.
After age 31, your health insurance rate is subjected to a two percent penalty rate increase for every year after age 30 that you did not have health insurance. Therefore, if you wait to purchase private health coverage until you're age 35, you will pay 10 percent more annually than you would have if you had purchased it at age 30.
There are exemptions for some people who were overseas when they turned 30, or for new immigrants, and certain others under special exception status. However, if you purchased private insurance after age 30 and are paying an age loading penalty on your health coverage, you will be relieved of the excess penalty after 10 years of continual coverage.
The earlier in life that you lock in to a private health plan, the more money you will save both immediately and over your lifetime.
5. Choose a health care provider who already works with your health fund.
Determine which hospital you prefer if and when the need for treatment does arise, and seek out those health insurance providers that have an agreement with your hospital of choice before making a decision on your health insurance purchase.
It's a good idea to also find out if your insurer has a list of "preferred providers," which would include those physicians and practitioners who also have made arrangements with the health funds regarding their charges for services. Request this information from every provider when comparing health insurance policies. This way you can be sure you'll receive the full gamut of benefits available at the lowest possible cost. These preferred providers often have "no gap" cover - special rates that reduce or eliminate out-of-pocket expenses to policyholders.
6. Double check your health insurance policy before you schedule any treatment or procedures to make sure you have coverage.
Any time you are headed to a private hospital for treatment, first check to see if the hospital and your health insurance provider have an agreement to be absolutely sure you have adequate coverage. At the same time, check with your insurance provider, physician and the hospital to see if there is a Gap between their fees and the government's Medicare Benefits. This is extremely important because if your physician charges more than Medicare covers and you do not have a "no Gap" plan set up, you could find yourself responsible for a considerable bill. Simply contact your doctor and your insurance company to double check on these items, and avoid being saddled with an out-of-pocket expense your weren't expecting.
7. File your expense claims promptly.
When you have a health insurance membership card, you can file a claim against your benefits at the time of treatment with no additional paperwork or filing to worry about, at least in most cases. Sometimes, you may still need to file a claim with your insurance provider. When that happens, make sure to file your claim promptly. The typical cut off for insurers to pay health care claims is two years. You can file your health insurance claim directly with your provider or at your area Medicare office, which has a reciprocal agreement in place with most insurance providers.
8. Whenever you travel overseas, suspend your health coverage.
Anytime you travel overseas for more than a few weeks but less than 24 months, certain medical insurance providers allow policyholders to suspend their memberships for the time they're out of the country, freeing the policyholders from paying premiums during that time period. While your insurance policy is suspended, your Lifetime Health Cover status remains intact, so you do not have to worry about age loading added when you return home. Contact your health insurance provider to make sure of their policy and rules regarding waiting periods and re-activation.
Remember too that Australia has reciprocal arrangements in certain countries, including New Zealand, Finland, Ireland, Italy, Malta, the Netherlands, Sweden and the U.K. For more information, visit http://www.smartraveller.gov.au.
9. Review your policy benefits annually.
Lifestyles change, individuals get married, have children, age - children grow up and move out on their own, couples separate. A lot can happen in the span of 12 months, which is why the Private Health Insurance Ombudsman recommends that everyone review their policy benefits once every year to make sure your coverage still fits your needs.
Regardless of your life changes, your Lifetime Health Cover status remains protected, and waiting periods for benefits that equal your current coverage are waived in compliance with the Private Health Insurance Act of 2007. This means you will be able to file claims related to features you had before you made any changes without interruption in benefits.
10. Compare policies to get the best price and the coverage you need.
To make sure that you are getting the best possible price on your health insurance premium, you must compare policies from different insurers, Make sure you are comparing policies that reflect the treatment plan and coverage you need, without filler services that you won't need. The more you know about private health coverage and government sponsored Medicare, the more likely you will find the best value for your money when it comes time to purchasing or renewing your health coverage.
Author Liz Ernst writes on health insurance matters in Australia and the U.S.
Private health insurance is a cost Australians should at least consider factoring into their budget. Different funds have products that better suit different groups of people. Visit the Your Health Insurance website (http://www.yourhealthinsurance.com.au) to compare pricing and policies, and learn more about buying health insurance in Australia.
It really does pay to shop for health insurance.
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