New Health Insurance Tiers Explained: How They Affect You

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It’s the news you’ve been waiting for: shopping for health cover is about to become less confusing. Changes to private health insurance are going into effect on 1 April 2019 that change the way hospital cover policies are categorised.

These changes will establish hospital product tiers, which should make things easier on consumers. At the moment, hospital cover is complex and tough to understand. After all, it’s hard to compare policies when they all offer different levels of cover.

With the new tier system, that is all set to change.

What are the changes?

Hospital policies will be classified as basic, bronze, silver, or gold. In addition, there will also be ‘in-between’ tiers of basic plus, bronze plus, or silver plus.

Each category has minimum requirements for cover, and the ‘plus’ tiers allow for some leeway. For example, a policy may include cover above the minimum requirements for its category, but not enough cover to put it in a higher tier. This policy can be given a ‘plus’ label.

These changes were designed with current policies in mind, so it does not translate to an overhaul of the private health cover system. Most existing policies will easily fit into one of the new tiers.

The system will be introduced on 1 April 2019. Any new policies established after this date must fit into one of the tiers. Insurers have until 1 April 2020 to use the tiers for all of their hospital products.

New hospital cover tiers: what’s included?

The new tiers establish minimum requirements for cover. Each subsequent tier builds on the required cover of the preceding tier.

Basic

There are only three requirements in this category, and all can be offered with restrictions. In addition to these three categories, insurers can also offer products from all other categories on a restricted or unrestricted basis. Requirements include:

  • Rehabilitation
  • Hospital psychiatric services
  • Palliative care

Bronze

The next tier is Bronze, which has the same minimum requirements as Basic, with the addition of unrestricted cover for:

  • Brain and nervous system
  • Eye (not cataracts)
  • Ear, nose and throat
  • Tonsils, adenoids and grommets
  • Bone, joint and muscle
  • Joint reconstructions
  • Breast surgery (medically necessary)
  • Diabetes management (excluding insulin pumps)
  • Kidney and bladder
  • Male reproductive system
  • Digestive system
  • Hernia and appendix
  • Gastrointestinal endoscopy
  • Gynaecology
  • Miscarriage and termination of pregnancy
  • Chemotherapy, radiotherapy & immunotherapy for cancer
  • Pain management
  • Skin

Silver

The Silver tier offers the same minimum requirements as Bronze, along with unrestricted cover in the following clinical categories:

  • Heart and vascular system
  • Lung and chest
  • Blood
  • Back, neck and spine
  • Plastic and reconstructive surgery (medically necessary)
  • Dental surgery
  • Podiatric surgery (provided by a registered podiatric surgeon
  • Implantation of hearing devices

Gold

Unlike the categories before it, Gold products must offer rehabilitation, hospital psychiatric services, and palliative care on an unrestricted basis. It is the top level of cover, and must also include the following unrestricted products:

  • Cataracts
  • Joint replacements
  • Dialysis for chronic kidney failure
  • Pregnancy and birth
  • Assisted reproductive services
  • Weight loss surgery
  • Insulin pumps
  • Pain management with device
  • Sleep studies

How will the changes to private health insurance 2019 affect me?

Australian consumers will be in a much better position to compare apples with apples when shopping for hospital cover. You can determine what you’re looking for from your hospital cover, and use that information to narrow your search.

For example, someone who is not interested in the additional cover that Gold offers—like pregnancy, joint reconstruction, or weight loss surgery—can eliminate that tier altogether when shopping around.

On the other hand, if you know you need cover for the implantation of hearing devices, you’ll need to focus your search on a tier no lower than Silver.

Aussie women also stand to benefit from these changes, as all policies from Bronze and higher include gynaecology cover. All medically necessary breast surgery is also included, giving women with breast cancer more cover at a lower level.

The prevalence of junk policies, which offer little to no value, should decline as they fail to meet minimum standards for the Basic tier. There should be more transparency, as Australians know the baseline of what each tiered policy offers.

Australians will be able to get a one page document about their cover, which details exactly what is included with their policy. This statement will replace the Standard Information Statement that insurers currently have to provide.

Of course, the question many people have in the face of these changes has to do with cost. Will the new health cover tiers affect the price of your premium? At this stage it’s just speculation, but modelling figures suggest that premiums for Bronze-level policies could go down, while the cost for Silver policies could go up.

The upcoming tier changes only apply to hospital policies, not to extras policies. At this stage, there’s nothing that you need to do to prepare for the changes. You are still free to switch hospital policies at any time, without repeating waiting periods. However, if you upgrade your policy, you may have to serve a waiting period for the increased level of cover.

The new health insurance tiers should bring more clarity to shopping for health cover, so consumers don’t have to question whether or not they’re making the right choice. Knowing what you’re covered for is an important part of staying informed, so you can get the most out of your health cover.

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