Knowing the Lingo: A Health Insurance Glossary
Purchasing a health insurance policy may seem quite a daunting experience when you consider the phrases bandied about. This alphabetically-arranged glossary aims to explain some of the more commonly used terms.
Acute Care Certificate – this applies to long-term patients and is granted by the treating doctor for every 30-day period a patient needs hospitalization. Health funds are relieved of the obligation to pay for treatment if the certificate is absent.
Admission – a person must be admitted by a doctor to be treated as a private patient in a registered private, public or day hospital. Emergency treatment at a private hospital is not an admission.
Agreement/Participating Hospital – a hospital that has a partner agreement with a health fund to ensure complete health cover for particular accommodation and operating theatre fees, ensuring gap fees are kept to a minimum for members. Each health fund has a different list of participating hospitals, and admission to non-participating private hospitals may mean a patient may have to pay the full (“out-of-pocket”) cost of hospital accommodation.
Alternative Therapies – includes treatment via Alexander technique, acupuncture, aromatherapy, Bowen technique, dietary, Chinese medicine, hydrotherapy, homeopathy, hypnotherapy, massage, kinesiology, myotherapy, reflexology, naturopathy, shiatsu, remedial massage and western herbalism.
Ancillary/Extras Cover – includes dental, chiropractic, physiotherapy, optical, pharmacy and alternative therapies (described above) that Medicare doesn’t cover.
Annual Limit – the maximum benefit a person can receive for a specific treatment in a 12-month period. This only applies after the waiting period has been served, prior to which only limited benefits are claimable.
Benefits – covers claims for treatment received at public, non-agreement private hospitals and day surgery, and is the minimum amount, as defined by the government, that health funds must pay.
Benefit limitation periods – allows a subscriber to enjoy lower insurance premiums by restricting the benefits a member can claim for treatment of specific conditions, e.g. being eligible for full knee replacement surgery benefits only after 3 years’ cover, despite the treatment’s standard 12-month waiting period.
Calendar and Membership Years – a membership year begins on the day a member joins the fund, whereas a calendar year spans January 1 to December 31. Some funds may use the terms interchangeably, so it’s advisable to clarify this in the beginning.
Certified Age at Entry – a health fund member’s age when he or she purchases hospital cover for the first time.
Change of Cover – refers to up- or downgrading of a health policy. Members should check if this action will affect any waiting periods to be served prior to becoming eligible for benefit claims.
Community Rating – ensures that all individuals are entitled to purchase the same health insurance policy at the same price as the other person, with the guaranteed right to renew said policy. A health fund cannot refuse to insure, or refuse to sell insurance to any individual.
Compensation and Damages from Others – refers to compensation and/or damages that can be claimed from compulsory third party insurance, worker’s compensation, common law, travel insurance, sports insurance, crimes compensation and litigation.
Co-payment – the amount a member agrees to pay for the cost of daily hospitalization.
Dependants – defined as children under 17 years and students (full-time) under 25 years living at home with no dependents of their own.
Excess – the amount a member agrees to pay for each hospital admission before benefits are paid out. Members tend to opt for higher excess to maintain lower premiums.
Exclusions – hospital procedures (public or private) for which a member will not receive payment.
Gap/Out-of-Pocket Expenses – the monetary difference that exists between the fees charged by doctors and the benefit paid out by the private health fund, and which the patient has to pay.
General Treatment Cover – covers non-hospital medical services excluded by Medicare, e.g. optical, dental, physiotherapy, other therapy and ambulance.
Medicare Levy Surcharge – a surcharge imposed by the government on those who don’t have private health insurance. Obtaining private insurance is subsequently more attractive than paying an additional 1% on taxed income.
Restricted Benefits – refers to a policy that provides fewer/limited benefits and the minimum payout for specific treatments in “exchange” for lower premiums. Often, members have to pay for theatre fees, same day theatre or intensive and coronary care units.
Waiting Period – the duration a member has to wait after joining a health fund to become eligible for benefits. Waiting periods may vary with each health fund.
30% Rebate – policy-holders of private health insurance aged 65 years and below are entitled to this rebate, which can be claimed a discount on premiums paid, a Medicare refund or claimed as a rebate on an annual tax return. It applies to those eligible for Medicare and holding private health insurance and applies to premiums for hospital and extras.
This list is just a small section of the terms used in private health insurance today. As each health fund may possess its own terms, it’s always best to ask for clarification before committing to a health insurance policy.
This article is opinion only and should not be taken as financial advice.
Filed Under: Understanding Insurance
