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Last Updated on 25 June 2018

Health Insurance and Pre-Existing Conditions

Many Australians purchase private health insurance coverage.  Hospital policies offered by private insurers pay for costs not covered by Medicare and make it possible for you to receive treatment in a private, rather than a public, hospital. You can also purchase general or ancillary insurance to cover other extras Medicare won’t pay for, such as physiotherapy, eye tests and dental services.

How many Australians buy private cover?

While private insurance can provide expansive coverage, there are restrictions on what health funds will pay for. One of the biggest restrictions applies to coverage for pre-existing conditions or pre-existing ailments.  If you are purchasing insurance for the first time or if you have experienced a gap in coverage, your new policy will not immediately begin to cover ailments that you already have.

What are Pre-Existing Conditions?

Pre-existing conditions are medical problems or ailments that you have prior to signing up for insurance coverage when you do not already have an active policy in place.  If you have allowed your coverage to lapse or have never purchased coverage and you come down with a medical problem, this problem will be considered a pre-existing condition when you buy insurance in the future.

How many Australians may have a disabling condition insurers will consider pre-existing.

Under the Private Health Insurance Act 2007 (PHI Act), insurers are permitted to impose a waiting period of up to 12-months before paying for hospital treatment for pre-existing conditions. This waiting period begins when you sign up for a hospital insurance policy for the first time. It does not apply when you switch from one policy to another.

In order for an illness or ailment to be considered a pre-existing condition that will trigger a waiting period, symptoms of the medical problem must have existed during the six months prior to taking on a new hospital insurance policy or upgrading coverage.

The Department of Health explains that this means:

  • The signs or symptoms of the medical condition must have been “reasonably apparent” or “reasonably evident” in the six months before signing up for insurance OR
  • You have some symptom, sign or impairment that would have been apparent to a reasonable GP conducting a routine external examination if you had sought a medical exam.

However, if you developed a lump in your breast and signed up for insurance a month later, breast cancer would likely be considered a pre-existing condition and a waiting period could be imposed.

Why Do Pre-Existing Conditions Matter?

When signing up for insurance, you want your insurer to pay for treatments for medical problems.  If you have a pre-existing condition, an insurer will not cover any treatment related to that condition for a period of up to 12 months.  This means you would be responsible for paying out-of-pocket for medical services to treat that condition that are not covered by Medicare.

The Private Health Insurance Act allows insurers to exclude coverage for pre-existing conditions to prevent people from waiting to sign up for insurance until after they have fallen ill. Health insurance is supposed to protect you in case you get sick and insurers assume the risk of you subsequently developing an illness after the purchase of a policy. Allowing people to sign up after they are already in need of hospital care would skew the risk pool and insurance could become prohibitively expensive for everyone.

Are the Rules Different For Hospital vs. General Cover?

Australian laws regulate the length of time an insurer can make you wait before your pre-existing conditions will be covered on a hospital policy. A health fund offering hospital coverage is not permitted to make you wait more than 12 months for coverage of pre-existing ailments.

There is no legal restriction on waiting periods for pre-existing conditions when purchasing general cover for the first time.  Insurers can set their own time periods during which you will not receive coverage for extra services related to your pre-existing condition. For example, if you develop a health problem that necessitates occupational therapy and you subsequently sign up for insurance for the first time, the insurer has discretion to set the length of time you must wait before occupational therapy is covered.

Many pre-existing conditions are treated by occupational or physio therapy.

How Does an Insurer Decide a Condition was Pre-Existing?

Insurers will appoint a medical practitioner to consider information that you and your physician provide. The practitioner will consider the type and nature of your health problems; customary symptoms for the ailment; and other relevant factors in determining whether your medical problems are pre-existing.

The insurer may determine that you had a pre-existing ailment even if you had not seen your doctor about the health problems you were experiencing prior to purchasing insurance. Your ailment can be considered pre-existing even if you did not have a formal diagnosis prior to purchasing insurance.

It can take time for an investigation to be conducted into whether you had a pre-existing condition before signing up for insurance. You should leave plenty of time to check with your insurance fund about whether you will be covered before you go into a hospital for treatment.

Do Pre-Existing Conditions Prevent You From Buying Insurance?

You can purchase insurance at the same rate as any other person, even if you have a pre-existing condition. There are no limits on the type of cover that you may buy from your health insurer.

However, when you purchase a new policy or upgrade to a higher hospital tier, you will need to serve out the waiting period imposed by the insurer before your pre-existing ailment is covered. After the waiting period has ended, you will be entitled to make claims for hospital coverage and enjoy the full benefits of the insurance coverage you have purchased.

Check out this calculator to see what to expect for your waiting period

Health Insurance Waiting Period Estimator

You will have to serve a waiting period when you start a new private health insurance policy or increase your level of cover. A waiting period protects members of the fund by ensuring that individuals aren't able to make a large claim shortly after joining and then cancelling their membership. This kind of behaviour would result in increased premiums for all members.

Use this calculator to choose a hypothetical date in the future (or leave it on the default setting, which is today's date) to determine when you will be covered for various types of coverage.

Months Standard Waiting Period
  • Accidents
  • Ambulance
  • Chiropractic/Osteopathic
  • Alternate/Natural Therapies
  • Dietetics
  • Eye Therapy
  • Hospital Treatment
  • Occupational Therapy
  • Pharmaceutical Perscriptions
  • Physiotherapy
  • Podiatry
  • Speech Therapy
  • General Dental
  • Optical
  • Orthotics
  • Major Dental
  • Pre-Existing Conditions
  • Pregnancy Related Services

How Do Pre-Existing Conditions Affect You if You Are Switching Insurance?

Pre-existing condition waiting periods for hospital cover generally apply only if you are purchasing coverage for the first time or if you are upgrading to a higher tier of coverage. If you are switching from one hospital cover plan to another, Division 78 of the PHI Act prohibits your new insurer from making you serve another waiting period.

If you are switching to a new policy for extras or ancillary services, as opposed to hospital coverage, the portability rules do not apply to limit an insurer from imposing new waiting periods for pre-existing conditions. However, most insurers will not disqualify you from coverage for pre-existing conditions provided you already had insurance before you switched policies. You need to check into this before you make the switch.

What are the Waiting Periods and Benefits Limitations for Pre-Existing Conditions?

Division 75 of the PHI Act establishes maximum waiting periods for consumers who purchase a private hospital cover policy for the first time. The maximum waiting periods are:

  • Twelve months for hospital treatment for pre-existing conditions.
  • Twelve months for hospital-substitute treatments for pre-existing conditions.
  • Two months for hospital or hospital substitute treatments for psychiatric care, regardless of whether you had a pre-existing condition.
  • Two months for rehabilitation or palliative care, regardless of whether your condition was pre-existing.

Only waiting periods for hospital cover are regulated by law. Waiting periods for general treatment, ancillary cover or extras are not regulated by law and individual insurers can set their own time limits before pre-existing conditions are covered.

Why Do Pre-Existing Condition Rules Make The Purchase of Private Health Cover Essential?

Life is uncertain and you could become ill at any time. If you do not have private health cover to pay for hospital coverage and other extras, you could be restricted by financial necessity in the treatments available to you. Even if you sign up for insurance immediately upon becoming ill, you may need to wait for a year for your private fund to cover any hospital costs and even longer for coverage for other Extras.  This means paying out of pocket if you need treatment in the meantime—- or foregoing the treatment that you need because you can’t afford it.

Don’t let this happen to you. Purchase private health cover today so you will not have to worry if you get sick tomorrow.

Disclaimer: The above information is correct and current at the time of publication

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