Understanding Private Insurance Coverage: Do You Need More?

Private health insurance is an option for those who want to be treated as private patients in public or private hospitals and have their choice of doctor or specialist. It can also help cover the cost of healthcare services that Medicare doesn't, such as dental, optical, and physiotherapy. In Australia, it is not compulsory to have private health insurance, but it may be beneficial for those who want more choice and faster access to healthcare services. There are two types of private health insurance: hospital cover and general treatment or 'extras' cover. When considering private health insurance, it is important to review the policy, weigh the costs and benefits, and understand the terms and conditions.

What does private health insurance cover?

Private health insurance plans typically cover medical, hospital, and preventive care. However, the specific benefits and coverage can vary significantly depending on the type of plan chosen. Here is a detailed overview of the coverage provided by private health insurance:

Hospital Services

Private health insurance helps cover the costs associated with hospital stays, surgeries, and treatments received during a hospitalisation. This includes expenses for inpatient care, such as surgeries, overnight stays, and other treatments administered in a hospital setting.

Medical Services

Private health insurance covers consultations, doctor visits, and outpatient treatment. It helps pay for expenses related to routine check-ups, medical examinations, and preventive care, ensuring individuals can access necessary medical services without financial barriers.

Mental Health Services

Mental health is an essential aspect of overall well-being. Private health insurance typically includes coverage for mental health treatment, including therapy and counselling sessions. This coverage helps individuals access the necessary support to manage mental health conditions and maintain their mental well-being.

Prescription Drugs

Private health insurance plans often provide partial or full payment for prescription medications. This coverage can be crucial, especially for individuals with ongoing medical conditions requiring regular medication.

Rehabilitation and Physical Therapy

Private health insurance can assist with the costs of occupational and physical therapy. Rehabilitation services are essential for individuals recovering from injuries, disabilities, or chronic conditions, helping them regain physical and mental skills.

Specialist Care

Private health insurance covers visits to medical specialists, such as cardiologists or dermatologists, or any other specialists an individual may need to consult. This ensures that individuals can access specialised care when required.

Vision and Dental Care

While adult dental and vision coverage are not considered essential health benefits, some private health insurance plans do offer this coverage. All plans in the Health Insurance Marketplace include vision coverage for children, ensuring that their eye health is taken care of.

Pregnancy, Maternity, and Newborn Care

Private health insurance plans cover pregnancy, maternity, and newborn care. This includes care before and after birth, ensuring that expectant and new mothers have the necessary support during this critical period.

Preventive and Wellness Services

Private health insurance promotes preventive and wellness care by covering services such as screenings, check-ups, and patient counselling. These services aim to prevent illnesses, diseases, or other health problems and encourage individuals to take a proactive approach to their health.

Chronic Disease Management

Private health insurance plans also cover chronic disease management. This includes ongoing care and treatment for individuals living with chronic conditions, helping them manage their condition effectively.

Pediatric Services

Pediatric services are an essential component of private health insurance coverage. These services ensure that children have access to necessary medical care, including oral and vision care, to support their overall health and well-being.

Birth Control and Breastfeeding Coverage

Private health insurance plans are required to cover birth control services and breastfeeding support. This coverage ensures that individuals have access to reproductive health services and can make informed decisions about their health.

Additional Benefits

Private health insurance plans may also offer additional benefits, such as medical management programs for specific needs like weight management, back pain, or diabetes management. Some plans also cover alternative therapies, chiropractic care, and wellness programs, contributing to holistic health and well-being.

What doesn't it cover?

Private health insurance is provided by a private company, not the government, and covers a little over half of the US population. It is highly regulated at both the state and federal levels. There are several types of private health insurance plans, and they vary in what they cover and don't cover. Here are some of the things that private health insurance typically does not cover:

• Cosmetic procedures: Health insurance usually does not cover cosmetic procedures aimed at enhancing physical appearance. However, some plans may cover such procedures if they are deemed medically necessary.
• Fertility treatments: Fertility treatments are not considered essential health benefits by the federal government, and many insurers do not provide coverage for them. However, some states mandate that insurers cover at least some fertility services.
• New technology: Many insurance companies may refuse to cover experimental or unapproved healthcare products and services that involve new technology.
• Off-label prescriptions: An off-label prescription refers to the use of a medication in a way that has not been approved by the US Food and Drug Administration. Coverage for such prescriptions varies among insurers, so it is important to confirm with your insurer whether they will be covered.
• Pre-existing conditions: Historically, health insurance companies were reluctant to cover pre-existing conditions, but this changed with the passage of the Affordable Care Act. Insurers can no longer deny coverage or charge higher premiums due to pre-existing conditions.
• Single rooms in hospitals: Some hospital policies cover the full cost of shared rooms but not single rooms. This limitation can vary depending on the hospital (private or public) and the specifics of the policy.
• Long-stay patients: If a patient stays in the hospital for more than 35 consecutive days, they are considered a long-stay or nursing home-type patient, and the cost of their accommodation after the initial period may not be covered by insurance.
• Ambulance services: In some places, emergency or other ambulance services may not be covered by private health insurance. However, individuals can usually organise separate cover for these services or include them as part of a combined policy.
• Specific treatments: Private health insurance may not cover all treatments outside of hospital stays, such as dental, optical, physiotherapy, or pharmacy services. It is important to check with your insurer to understand what is and isn't covered by your specific policy.

How to save money with private health insurance

Private health insurance can be costly, but there are ways to save money on your policy. Here are some tips to help you reduce your premium and get the best value for your money:

Evaluate Your Coverage Needs:

Review your current policy and ensure you're only paying for what you need. Consider your age, health status, and likelihood of requiring specific treatments. For example, if you're in your twenties, you might not need coverage for hip and knee replacements. Similarly, if you're in the mature stage of life, you may not require coverage for IVF and obstetrics. Assess your extras cover as well and exclude any unnecessary therapies or treatments.

Shop Around for a Better Deal:

Compare policies from different insurers to find the best value for your money. The same level of cover can be hundreds of dollars cheaper with another provider. This is especially true for Gold policyholders, but even those with Silver or Bronze policies can find more affordable options.

Take Advantage of Timing:

March and June are typically the busiest months for Australians to sign up for health insurance due to impending premium increases in April. Health funds tend to offer various bonuses and incentives during these peak periods to attract new customers. Therefore, shopping around during these months can help you find a more competitive deal.

Prepay Your Premium and Use Direct Debit:

Consider prepaying your premium for the year to lock in the current rate and avoid imminent price hikes. Additionally, some health funds offer discounts of up to 4% if you pay via direct debit or pay your annual premium in advance.

Consider a Higher Excess:

Opting for a higher excess can reduce your premium. If you don't anticipate needing hospitalisation in the next year or two, a higher excess could be a good way to lower your overall costs. However, keep in mind that this strategy may not suit older individuals with more frequent health issues.

Single vs. Couples Policies:

Contrary to what one might expect, couples policies are often not cheaper than two singles policies. Under the "Community Rating" system, insurers must charge everyone the same premiums for the same level of cover. With a couples policy, you may also be paying for coverage that only one of you needs. Therefore, consider whether two singles policies might be more cost-effective.

Corporate or Restricted Membership Health Funds:

Some companies offer corporate health insurance with exclusive discounts and perks, such as lower premiums or free gym memberships. Additionally, restricted membership health funds are open to specific industries, unions, or associations and can offer more affordable Gold-level policies.

Age-Based Discounts:

If you're under 30, you may be eligible for a premium discount of up to 10% on Hospital Cover.

Ambulance Cover:

Unless you live in a state where ambulance services are covered by Medicare, ensure your health policy includes ambulance cover. Emergency transport can be costly, and you don't want to be caught unprepared.

Avoid Unnecessary Emergency Room Visits:

Where possible, opt for an in-network urgent care clinic instead of the emergency room for non-life-threatening issues. Urgent care clinics are significantly cheaper and can provide faster treatment for minor illnesses and injuries.

Remember, while saving money is important, don't compromise your health needs. Ensure that any changes you make to your policy still provide you with the necessary coverage for your health and well-being.

How to claim Medicare when you have private health insurance

It is possible to have both private insurance and Medicare coverage at the same time. In such cases, a process called "coordination of benefits" determines which insurance provider will pay first. This provider is called the "primary payer". The primary payer covers any services until the coverage limit has been reached. The "secondary payer" then covers any costs that the primary payer doesn't, but may not cover all of the remaining costs.

If you have private health insurance, you can still use Medicare services. There are times when you can claim Medicare benefits and use your private health insurance simultaneously. For example, if you go to a public hospital as a private patient, you may be able to claim the costs covered by Medicare from them and some or all of the other costs through your private insurance.

To do this, you will need to claim from two places for the same bills. You will need to submit a Medicare claim form and a Medicare Two-way claim form. If you submit your forms to Medicare, they will pass on the insurer's share to them. If you submit your forms to your insurer, they will pass on Medicare's share to them.

You can also use Medicare Two-way to claim for a treatment that Medicare does not cover, such as physiotherapy, dental, and optical. However, not all insurers offer Medicare Two-way, so you will need to check with your insurer. If they do not, you will need to make claims with Medicare and with your insurer.

Private health insurance and tax

The Medicare levy surcharge is an additional tax of up to 1.5% of taxable income that applies to individuals who don't have private hospital cover and earn above a certain income level. This surcharge is designed to encourage people to take out private health insurance and reduce the demand on the public healthcare system.

Higher-income earners are often encouraged to purchase private health insurance to avoid paying the Medicare Levy Surcharge. However, it is important to note that cheaper private health insurance policies that are exempt from the surcharge may offer minimal treatment coverage, potentially leaving customers with unexpected out-of-pocket expenses.

When considering private health insurance, it is essential to carefully review the policy details, understand what is covered, and choose a plan that suits your specific needs. Additionally, it is worth noting that the Australian Competition and Consumer Commission (ACCC) has called for standardisation of policies across providers to make it easier for consumers to make informed choices.

Overall, private health insurance can provide tax benefits, but it is important to weigh these advantages against the potential costs and limitations of different policies.

Frequently asked questions