Last Updated on 13 February 2020

8 Crucial Considerations When Choosing A Policy

The Australian health care system provides a wide range of services, both private and publicly funded. Medicare is available to all Australians and residents in Australia (provided they meet the relevant conditions), although many people also opt to supplement this by purchasing a private health insurance policy.

Private health insurance providers, or health funds, ensure that more Australians have access to the private healthcare system. The range of services covered by a policy can vary with each fund, as can their terms and conditions. However, there are generally eight factors to take in to consideration before choosing a policy.

The Price is Right

In general, a person can look forward to more comprehensive health coverage if he or she subscribes to a pricier policy. On the other hand, there is no such thing as a one size fits all policy. A suitable policy and its subsequent price tends to vary with a person’s current healthcare requirements. When considering a policy’s price, you also have to take in to account the government’s health insurance rebate as well as if you are subject to health cover loading.

Another factor to consider regarding the price of an insurance policy is whether the fund offers discounts on premiums based on frequency of payment or the use of direct debit.

Excess and Co-Payments

The excess to which each subscriber is subjected can range from $0-$1000 each calendar year. Key points to keep in mind when evaluating different policies are:

  • Higher excess can mean lower premiums
  • Little or no excess may translate in to higher premiums

A policy where the excess is higher is viable if you’re a relatively healthy individual who doesn’t foresee being admitted to the hospital in the following 12 months. It allows you to make substantial savings compared to a policy with no excess but has high premiums.

Co-payments can fall in a daily range of $250-$500. The amount is something a person has to pay upfront before receiving reimbursement from the fund and can apply to the following:

  • Basic visits to the family doctor
  • Hospitalisation (including emergency admission) and extended medical treatment

A health insurance policy that honors co-payments for both is certainly attractive. However, premiums may be higher for policies that allow co-payments for simple medical treatment.

Extras Do Matter

Extras are also known as ancillary cover, which takes care of treatment options that aren’t covered under hospital cover. Extras may vary under different policies, and you certainly wouldn’t want to subscribe to one whose extras aren’t applicable to you, no matter how attractive the price.

For one individual, extras that encompass dental and optical care may be sufficient, while another might look for cover for courses on quitting smoking or a gym membership.

What is the Waiting Period?

The waiting period signifies the span of time between a person signing up for a policy and the time they are finally eligible to claim benefits. The waiting periods for most funds are:

  • Standard extras: 2 months
  • Optical: 6 months
  • Preexisting ailments/conditions, major dental: 12 months

If one or more of these conditions are relevant to a consumer, he or she might want to consider a policy with a shorter waiting period. Some funds may also waive the waiting period during promotions, which is worth considering when deciding on a health insurance policy.

Is Loyalty Really Its Own Reward?

Aside from lower premiums in lieu of higher excess payments, or higher premiums in exchange for shorter waiting periods, a person might consider purchasing a policy from a fund that appreciates customer loyalty.

Many people would welcome premium discounts based on the number of years a person has subscribed to a particular fund, instead of premiums that automatically go up year after year.

On the other side of the spectrum, a person might want to go with a different fund when his or her policy is up for annual renewal. Some funds profer attractive bonuses, discounts or deals to consumers who join or switch from another fund.

Does the Policy Include Providers?

For the sake of convenience, the health insurance policy you do wind up committing to should have a list healthcare specialists and/or providers registered to it in the area in which you live. A list of providers in your area means that seeking and receiving insured treatment is easy and convenient.

In some instances, the providers themselves facilitate the claims process with a simple claiming system for billing.

Does the Cover Match Your Needs?

Different insurance plans provide different levels of cover to meet most needs.

Comprehensive cover is the highest level of health insurance a person can subscribe to, and covers:

  • Choice of private hospital and doctor
  • Reduced or eliminated excess by covering a large range of medical services
  • Extras with higher benefit limits

Basic coverage, on the other hand, provides for:

  • Coverage for some treatment in a private hospital
  • Partial cover for other treatment in a private hospital
  • Cover for a wider range of treatment in a public hospital (all of which covers your choice of doctor)
  • Extras with lower benefit limits

More benefits naturally translate into higher premiums, the final decision for which goes back to the question of the level of health insurance you’re looking for.

Are Its Features Relevant to You?

When determining a policy to subscribe to, a person has to consider the lifestyle he or she leads. For instance, a person or couple who intend to have children should go with a plan that includes obstetrics cover, whereas cardiac or optical cover is relevant to those with a history of heart or optical problems.

Aside from evaluating the policy’s features, determining the features most applicable to you can be as easy as getting a quick medical examination from a general practitioner.

Other than the obvious aspects you should look for in health cover, an examination can turn up surprising insights in to your health requirements.

Check Your Policy’s ‘Health’ on a Regular Basis

The journey isn’t over even after you’ve settled on a health insurance policy. All policies are slated for renewal, and that is the time a subscriber should review whether it still meets his or her healthcare requirements. High premiums and low benefits are reasons to switch funds, but you should ensure that it doesn’t compromise your healthcare needs.


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