How to Select a Health Insurance Provider

If you’re looking for private health insurance, or switching providers, let’s reduce the brain strain.

Government regulations now ensure that the majority of people contribute to the cost of their health care through government-imposed levies, unless you prefer to be treated under the public system (Medicare, public hospitals, waiting lists) for the rest of your life, and are prepared to earn under the $90,000 threshold.

Lifetime Health Cover (LHC)

If you don’t have private health insurance by the time you hit 31 years of age, the government makes you pay the LHC loading if ever you do decide to purchase hospital cover. You’re then hit with a 2% loading for every year you did not have health cover. For instance, if you purchase health cover at age 40, you’ll pay 20% more than someone who purchased health cover at age 30. The loading caps at 70%.  Here’s a LHC calculatorto help you with the figures.

Medicare Levy Surcharge (MLS)

If you earn more than $90,000 and don’t have health insurance, the government charges a compulsory Medicare Levy Surcharge in addition to the standard Medicare Levy that every income earner pays to subsidise the public health system (Medicare). In some cases, it’s cheaper to purchase basic hospital cover (approx. $1000-$1400 per annum) than it is to foot the MLS.

Hospital + Extras?

You can either buy just Hospital cover (basic, intermediate, top), or just Extras cover for treatments like dental, new glasses, physio etc. You can buy these from the same health fund, or separate funds and possibly get a better deal, or find an Extras cover more appropriate to your needs. Maybe you prefer a naturopath to a dietitian, for example, or massage therapy to physiotherapy. Check out Health.com.au’s super easy guide to helping you choose the cover you want.

Consumer advocacy publication, Choice Online (June 2014), notes that Extras cover is more of a “budget management tool”. For example, if you have a car accident, you pay the excess of $350, but the insurer pays all other repair costs. With Extras, it’s reversed: the health fund pays the $350 excess, but you pay the rest, which is usually the greater amount.

Extras cover might be useful if, say, you’re prone to back issues and often need regular chiropractic or massage therapy, or maybe your eyesight is failing and you need new specs each year.

How to Choose?

There are currently 36 health funds registeredunder the Private Insurance Health Act 2007 and 12 of those are restricted funds that only sell insurance to members of a particular industry or field, like teachers, the defence force, or police. Still, it’s mind boggling.

Fortunately, the government provides a health fund comparison Wizard that compares funds for you. There are also brokers that help you compare health funds, like iSelect, HelpMeChoose and Choosi, but they only compare the health funds with which they have business arrangements, so you could be missing out on cheaper options.

Review Annually

The Private Health Insurance Ombudsman reckons it’s good to review your health fund annually and offers these tips on managing your policy. Your lifestyle needs change for one, from single to family healthcare, or extra wear and tear as you age.

Competition is also hotting up as the National Commission of Audit conducted in February pushes for health funds to offer greater value for money and better preventative health care options, such as lower premiums for people who make healthier lifestyle choices. (eg: Health.com.au offers rebates for weight loss programs, quit smoking programs and gym memberships).