Last Updated on 22 December 2020

What are the changes to private health insurance in 2020?

Key Points
  • The 2019-2020 private health insurance reforms will continue to be rolled out over the year, with many significant reforms taking effect on 1 April 2019. All reforms must be in place by 1 April 2020.
  • Basic, Bronze, Silver, and Gold product tiers will be introduced on all hospital policies, making it easier to compare cover.
  • Insurers will be able to offer a number of optional benefits that could reduce your premiums, such as increased excess levels, youth discounts, and travel and accommodation benefits for rural Australians.

2019-2020 Private health insurance reforms

2019 and 2020 are big years for private health insurance, because the long-discussed reforms will come into effect. But what are these reforms, and how will they affect you? We’ve put together a guide on what to expect, from the new health insurance tiers to the removal of natural therapies and everything in between.

The Australian Government is introducing these reforms to help people get more out of their cover. Roughly 13.5 million Australians—more than half of the population—have private health insurance, but not everyone knows what they’re covered for.

These reforms are intended to simplify private health cover from start to finish, so you can easily find a policy and get the most for your money.

Private Health Insurance Tiers

One of the most significant reforms is the introduction of four tiers of hospital cover: Gold, Silver, Bronze, and Basic. Insurers will begin using these tiers from mid-2019, and have until 1 April 2020 to make sure all hospital policies comply with the tier system.

Your existing policy will be classified into one of these product tiers, which will make it easier for you to check whether or not your policy offers the level of cover you want.

For these tiers to work, the Government established minimum standard clinical categories. These categories standardise the description for different types of hospital treatments.

For example, there is a category called ‘back, neck and spine.’ If a tier covers hospital treatments for this category, it must cover everything named in the category. So it cannot cover back and neck treatments but not cover spine-related treatments. That means no more selective exclusions, making it easier for you to compare like with like.

However, categories can be restricted or unrestricted. This doesn’t refer to what is covered, but to what extent it is covered. If a category is restricted, the insurer may pay limited benefits for hospital costs within the category.

If a category is unrestricted, insurers have agreements with most hospitals so you can avoid out of pocket costs above your excess or copay for hospital treatment. Be aware that you may incur out of pocket costs for doctors’ fees when a doctor charges more than the Medicare Benefits Schedule fee.

Hospital cover product tiers

Health insurers will also be able to offer coverage that is higher than the minimum requirement for a tier, but doesn’t quite reach the next tier. These will be sold as Basic Plus (+), Bronze Plus (+), and Silver Plus (+) products.

Improved women’s health services

The new product tiers will also improve cover for women’s health services. If you select a health cover product that is in the Bronze or Silver tier, you’ll have guaranteed cover for medically necessary breast reconstruction, ovarian and breast cancer treatment, and gynaecological services.

With the Gold tier, women are guaranteed cover for pregnancy and assisted reproductive services, like IVF. Some insurers may also elect to offer pregnancy cover at a lower level, such as with a Silver Plus policy.

Optional benefits of health insurance reforms

Insurers will have the ability to offer certain benefits on a voluntary basis. These were designed to help make health insurance more affordable, and expand access to health cover for all Australians.

Insurers will be able to offer any of the following benefits from 1 April 2019.

Youth discounts

Starting 1 April 2019, health insurers can choose to offer a youth discount for people aged 18 to 29. This initiative is to encourage people to take out hospital cover at an early age by making it more affordable.

Policyholders can get an age-based discount of up to 10% when they take out a hospital policy before the age of 30. That discount rate will stay in place until the age of 41, provided you stay on the same policy.m

If you switch insurers or policies, it is up to your new insurer to decide if they’re willing to honour an existing youth discount rate. You will be able to get this information before you switch.

Once you turn 41, your discount will be phased out at a rate of 2% per year.

Assistance for rural Australians

People living in regional and rural Australia often have to travel long distances to get medical treatment, and it can be costly. Approximately half of health insurers offer benefits for travel and accommodation, and usually only with top extras cover. Examples of regional health funds include Westfund and Cessnock District Health (CDH).

From 1 April 2019, insurers can choose to offer travel and accommodation benefits with hospital cover to those living in regional and rural Australia. This is intended to help rural Aussies get the treatment they need, by easing the pressure of hefty travel and accommodation costs.

Increased excess levels

Starting on 1 April 2019, voluntary excess levels will be raised, which could help you achieve lower premiums. Maximum excess levels have been the same for nearly 20 years, so this is a notable change.

Consumers can choose to raise the excess on their hospital cover, which could result in a savings on premiums of $200 per year for singles and $350 for families.

Insurers are not required to offer the higher excess levels, but will have the option to do so on a voluntary basis.

Removal of natural therapies

Certain natural therapies are on the chopping block from 1 April 2019. The former Commonwealth Chief Medical Officer chaired a review and found that there was no clear evidence that these therapies work. As a result, they are being excluded from the definition of private health insurance general (extras) treatment.

You will still have access to these therapies, but they will no longer be covered by private health insurance. This should help contribute to the reduction of private health insurance premium increases.

Insurers will be able to offer incentives, like services provided by a natural therapist, but these services must comply with the requirements of the Private Health Insurance (Complying Product) Rules.

The natural therapies that will be removed are as follows:

  • Alexander technique
  • Aromatherapy
  • Bowen therapy
  • Buteyko
  • Feldenkrais
  • Western herbalism
  • Homeopathy
  • Iridology
  • Kinesiology
  • Pilates
  • Reflexology
  • Rolfing
  • Shiatsu
  • Tai Chi
  • Yoga

Reforms already underway

Some of the new private health insurance reforms have already been implemented. These include increased access to mental health services and a stronger Private Health Insurance Ombudsman.

Mental health treatment access

Reforms to support mental health went into effect on 1 April 2018, making it easier to access mental health and addiction services.

Basic and middle level hospital cover typically offered restricted cover for mental health, making treatment very expensive for policyholders who need care. Upgrading to a higher level of cover often came with a two-month waiting period, so patients struggled to get the care they needed right away.

The reforms make it possible for those with basic or mid-level hospital cover to upgrade their cover without serving a waiting period. This exemption can only be used once.

Private Health Insurance Ombudsman

The Private Health Insurance Ombudsman, or PIHO, is an organisation that works to protect consumer interests in matters relating to private health cover.

PIHO can take complaints about a health insurance arrangement, but not about the quality of service or treatment. It is a free service for consumers.

As part of the health insurance reforms, the Private Health Insurance Ombudsman’s powers have been strengthened under an expanded role. It now has the authority to inspect and audit private health insurers as part of its complaints process.

The 2019 health insurance reforms will give consumers more choice when it comes to their health cover. Comparing health cover is simpler than ever, thanks to the new product tiers.

Want to make shopping for health cover even easier? Use our comparison tool to find a great price on the level of cover you want, then our friendly team will get everything set up for you.


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