Last Updated on 13 October 2020

How mental health works with private health insurance


We’re lucky in this country to benefit from a huge number of fantastic services to support our mental health. Most conditions can be treated or managed, especially with early intervention.

Yet the number of people seeking support for their mental and emotional wellbeing is significantly less than those accessing treatment for physical illnesses.

But mental health conditions can and should be addressed in the same way we seek help for torn ligaments or fractured bones.

Choosing the right insurance can help you access expert services, such as counselling or rehabilitation, without the added pressure of finding the money for treatment. This guide will walk you through everything you need to know.

A quick note: If you’ve arrived on this page and need immediate help, we’d suggest speaking to the team at Beyond Blue.

Key Points
  • 45 percent of Aussies will experience some form of mental health condition in their lifetime.
  • Mental illness is supported in both hospital cover and extras, however this may vary from fund to fund so it’s important to conduct a proper comparison.
  • Services related to mental health typically only carry a two month waiting period, making them some of the easiest benefits to access.
  • Mental health can be distressing but finding the right cover can remove the pressure of financing treatment yourself.

What is mental illness?

The Department of Health defines mental illness (which is also known as a mental health disorder) as “a health problem that significantly affects how a person feels, thinks, behaves, and interacts with other people”.

The major categories of mental illness include:

  • Depression
  • Anxiety
  • Schizophrenia
  • Bipolar mood disorders
  • Personality disorders
  • Eating disorders

Mental health conditions also affect how a person thinks, feels and behaves, and are generally considered, medically, to be temporary and less severe than mental illness – although that may not be the case for somebody coping with a condition.

Mental health conditions are often the result of a stressful period in life, such as postnatal depression or post traumatic stress disorder.

What treatments are available for people experiencing mental illness?

Mental health treatments can vary depending on their symptoms and severity, however most treatments can include medication, regular counselling sessions and inpatient treatment in a hospital or specialist recovery centre.

In terms of private health insurance, most treatments will come under your extras cover. This is for treatments like counselling and therapists that take place outside of hospital. However, inpatient psychiatric services come under hospital cover.

You’ll need to decide what’s best for you and if you’d be better served by hospital cover, extras cover or a combined policy.

Not all of the treatments will be covered by private health insurance (we’ll get into this below) and some funds have restrictions on what you can or can’t access depending on your level of hospital cover, so it’s always worth comparing and checking exactly what’s covered.

Which mental health conditions are covered under private health insurance?

Private health insurance is split into hospital cover and extras. Hospital cover will look after some or all of your out-of-pocket costs for things like private patient inpatient care at a public or private hospital, or treatment facility.

If you want unrestricted access to hospital psychiatric services you’ll probably need to take out a top tier Gold hospital policy as most insurers have this service in their most expensive package. As ever, it’s worth comparing to make sure you’re getting the best deal.

Extras deal with out-of-hospital treatment such as therapy and counselling and even pharmaceutical subsidies for many of the conditions listed above. You’ll be able to get rebates back from your health fund on your extras.

Remember, both extras and hospital cover will come with waiting periods, so you may not be able to claim back on treatment straight away.

Does Medicare cover mental health treatments?

Medicare can cover part or all of the cost of treatment for many mental health conditions via public hospitals, recovery centres, specialist services and even pharmaceutical subsidies. According to the Australian Institute of Health and Welfare, the federal government spent $9.9 billion supporting mental health initiatives in 2017-2018.

GPs are often the first step in seeking support for mental health. Your local doctor can discuss your treatment options and put together a mental health care plan, which currently covers up to ten sessions with a mental health expert each year. Under federal government proposals this will soon rise to twenty sessions.

Do I have to serve any waiting periods to access mental health cover?

Mental health treatments tend to come with two month waiting periods. This is the time you’ll have to wait before you can access the treatment. They’re among some of the shortest waiting periods in private health.

If you need urgent treatment, there’s also the mental health waiver. This is a government requirement introduced in 2018 that required all insurers to implement a waiver for mental health services provided as hospital or hospital substitute treatments. This includes drug and alcohol treatment.

You can use the mental health waiver once per person in your lifetime. To access it, you’ll need:

  • To hold private health insurance
  • Already served a two month waiting period on any partially covered (otherwise known as restricted) hospital-based psychiatric services.
  • Have hospital cover that includes hospital-based psychiatric services

This waiver includes pre-existing conditions, so it is possible to upgrade your coverage while you’re seeking help, without serving the two month waiting period and benefit from increased financial assistance.

How much will health insurance for mental health cost me?

This will vary from fund to fund and depend on whether you take out hospital cover, extras cover or a combined policy. Remember, you’re not just taking out mental health extras and many insurers will have packages that include other everyday expenses like dental and optical.

Also remember that the cheapest cover may not necessarily give you value for money. There’s three important questions to consider when you’re comparing taking out or switching private health insurance.

1. How much will you get back in terms of rebates on your extras?

Different policies will offer you different amounts back on mental health treatment. These can vary so if you think you’ll be visiting a therapist regularly, it’s worth finding a policy that gives you a significant amount back.

Some funds give you a percentage of the session back. For example, if your therapist costs $200 per session and you get 60% back, you’ll have an $80 out-of-pocket expense.

Others may give you a set benefit, no matter the cost of the session. For example, if your fund gives you a set benefit of $70 per session, you’ll have a $130 out-of-pocket expense for that same therapist.

As you can see, it pays to compare the smaller details on extras. This is where the specialists at Health Insurance Comparison can help you dig deeper and find the extras that give you real value for money.

2. Your extras limits.

This is the amount you can claim on your extras, such as counselling, over the course of a calendar year. Anything above the limit comes out of your pocket. If you’re hitting your limit quickly, you may want to review your cover and see if there’s better policy that costs a similar amount.

3. Gap fees

Doctors and specialists who treat you while you’re in a hospital can choose whether to participate in your insurers’ no gap and known gap arrangements (if you’re not sure what gap fees are, we’d recommend reading our guide. But, in short, they can land you with some seriously large bills even if your cover isn’t quite right). Always check which type of agreement your doctor or specialist has with your insurer before treatment.

Are mental health retreats covered under health insurance?

Some parts of a treatment program could be covered by your insurer. For example, this could include subsidies for eligible psychology, massage or wellness therapies.

However, most mental health and wellbeing retreats are likely to involve out-of-pocket expenses.

Is postnatal depression covered under my mental health policy?

Postnatal depression is classified as a mental health condition and is covered under many policies.

Although treatment can vary, most providers will assist patients with a range of support options. We cover this in more detail in our pregnancy and private health insurance guide.

Can I access a private health insurance rebate for psychology services like counselling?

Most insurers offer policies that provide benefits towards psychology sessions. Health Insurance comparison can help identify a range of appropriate policies for you.

You can also access psychology services on Medicare via a mental health care plan. This covers up to twenty sessions with a mental health professional each year. You’ll need to speak to your GP to get a referral.

It’s worth noting not all professionals will offer bulk billing, so there may still be out-of-pocket costs. Having appropriate private health insurance means you can get financial assistance for care beyond the initial sessions covered by Medicare.

How do I find the best mental health cover?

The best way to find mental health cover that’s right for you is to compare policies according to what you need.

Not all policies will give you full cover for ongoing psychiatric services or private hospital stays related to mental health, and many lower tier hospital cover policies have restrictions around hospital treatment.

It’s why it’s important to consider the level of cover you will need in order to minimise your out-of-pocket expenses.

You’ll also want to consider how much you’re getting back on your extras and what your extras limits are. Get this right and your health cover can be a lot more cost effective.

 

It’s why it can pay to take out a free, no obligation quote with one of our specialists at Health Insurance Comparison. They’ll compare policies across our panel of trusted insurers to find a policy that’s both affordable and covers what you need.

This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.

References:
Black Dog Institute, Facts and Figures about Mental Health [PDF]

AIHW, Mental health services in Australia
Federal Government Department of Health, Budget 2020-21: Prioritising Mental Health [PDF].


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