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Private Health Insurance and Waiting Periods

Jonathan February 2nd, 2015 0 comments
Private-Health-Insurance-and-Waiting-Periods

When you buy private health insurance to cover hospital care or extras, you may be subject to waiting periods. Waiting periods apply when you buy a new policy for the first time or when there has been a gap in your coverage.  Waiting periods also apply if you upgrade to a new policy that provides a higher level of coverage than your previous insurance.

Waiting periods are imposed to prevent people from buying insurance only when they need a particular type of treatment. However, they can be frustrating if you get sick and you need medical help above and beyond what Medicare covers. The best way to make sure that waiting periods don’t preclude you from getting the treatment you need is to ensure that you have health insurance that you do not allow to lapse.

What are Waiting Periods?

Waiting periods are a period of time after you purchase insurance and before certain types of treatments are covered. Waiting periods can apply to both Extras cover and hospital cover.

The Private Health Insurance Act 2007 imposed limitations on the length of waiting periods for hospital cover, obstetrics, mental health services, palliative care and rehabilitative services. No laws regulate the maximum waiting period for Extras cover and health funds are free to set their own rules.

The Private Health Insurance Act also has portability rules in place to protect people who want to switch from one health fund to another. When you change hospital coverage, no waiting periods may apply unless you change to a higher tier of cover than you had before making the switch or unless you were still in the waiting period with your previous insurer. If you were still in the waiting period, your new health fund must credit you for the amount of time you waited for cover with your old health fund.

What are Benefit Limitation Periods?

Benefit limitation periods are offered as an option to individuals purchasing health cover for the first time or upgrading their cover. Benefit limitation periods for hospital cover do not apply when switching to a new insurer providing the same cover you had before.

Benefit limitation periods are initial periods after a policy is purchased in which you receive only partial benefits for certain kinds of treatments. Because health funds limit their risks of costly payouts early on after you become insured, policies with lengthier benefits limitation periods may be less expensive to buy.

Benefit limitation periods generally range for between one and three years, depending upon the policy and type of service. Be sure to speak with your health fund about the limitation period that will apply to the services you need.

How Long Do Waiting Periods Last?

The length of time a waiting period lasts is going to vary depending upon the policy purchased. The Private Health Insurance Act 2007 sets the maximum waiting period for certain types of services for hospital policies. These maximum waiting periods include:

  • 12 months for pre-existing conditions.
  • 12 months for obstetrics services.
  • Two months for psychiatric care.
  • Two months for palliative care and rehabilitation.
  • Two months for other hospital services.

Health funds offering Extras cover set their own waiting periods. These can vary from policy to policy although many health funds have similar wait times. For example, it is common for a health fund to require a 12-month waiting period for major dental work or for orthotic appliances.

Are There Different Waiting Periods for Hospital vs. General Cover?

There are different rules for hospital cover versus Extras cover. Waiting periods for hospital cover are set by the Private Health Insurance Act and insurers cannot impose a longer waiting period than the mandated-maximum. Health funds can sometimes impose a shorter waiting period if they choose to do so.

There are no rules for waiting periods for Extras cover. This means that a health fund can make you wait as long as they believe is appropriate before providing cover for specific types of treatments. You need to know the waiting period before you buy so you don’t end up signing up for a policy that you can’t use when you need it.

Waiting period calculator

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.

Most health insurance funds will apply the following waiting periods to new members taking out a hospital cover product:

(These are the maximum waiting periods allowed by law for hospital cover.) These waiting periods also apply to any additional benefits on your new product if you transfer to a higher level of hospital cover, with your existing fund or with a different fund.

Note: If you are moving to the same or a lower level of cover, you will NOT have to re-sit waiting periods.

Some funds also apply Benefit Limitation Periods for some types of treatment on some of their hospital covers.

Months Standard Waiting Period
0
  • Accidents
  • Ambulance
2
  • Chiropractic/Osteopathic
  • Alternate/Natural Therapies
  • Dietetics
  • Eye Therapy
  • Hospital Treatment
  • Occupational Therapy
  • Pharmaceutical Perscriptions
  • Physiotherapy
  • Podiatry
  • Speech Therapy
  • General Dental
6
  • Optical
12
  • Orthotics
  • Major Dental
  • Pre-Existing Conditions
  • Pregnancy Related Services

How Do Pre-Existing Conditions Affect Waiting Periods?

If you have a pre-existing medical condition when you buy hospital cover for the first time; buy cover after a gap in cover; or upgrade cover, then your health fund does not have to pay for treatment related to your pre-existing condition for a period of 12-months.

Your health fund will consider whether a medical problem you have should be considered a pre-existing condition. Your doctor does not get to make this determination, although the health fund will speak to your doctor.  It can take time for a determination to be made on whether a condition is pre-existing so you should seek approval for hospital care as early as possible so a determination on cover can be made.

A condition is defined as pre-existing if you have symptoms within six months of buying cover.  There is no requirement that the condition actually have been diagnosed before your purchase of insurance for it to be considered a pre-existing ailment that triggers a waiting period.

How many Australians have a disability that could be classified as a pre-existing condition

Once a condition has been determined to be pre-existing, your health fund is not going to pay for hospital treatment related to the condition until the waiting period has ended. If Extras treatment is necessary, the waiting periods set by your health fund will apply to determine when cover begins.  Until the waiting period ends, you will be reliant on Medicare and on your own finances to cover any treatment you seek related to the pre-existing ailment.

What are the Waiting Periods for Obstetrics and Pregnancy?

There is a maximum 12-month waiting period imposed by law for obstetrics cover. You need to ensure that you buy r cover long before you become pregnant or your policy will not kick in to pay for the pregnancy until after it has ended and the child has been delivered.

Pregnancy and obstetrics cover does not extend to when the baby is born. It is advisable to sign up for family cover before the birth  in case emergency medical treatment is necessary shortly after birth.

Do Waiting Periods Apply When Switching Policies?

Division 78 of the Private Health Insurance Act prohibits a health fund from making you serve another waiting period when you move from one hospital insurer to another. If you switch policies to a new health fund or to new cover with your existing health fund, you will not have a waiting period for hospital cover unless your new policy is an upgrade.

If you have served part of your waiting period and you wish to switch to a different policy, the time that you waited will carry over. For example, if you have already waited for two months and you switch to a new health fund, they cannot impose more than a 10-month waiting period for hospital and pre-existing condition cover. The two months you originally waited plus the 10-months you wait with the new company will equal the maximum 12-months allowed by law.

This law prohibiting re-serving waiting periods applies only to hospital and not to Extras coverage. However, most health funds offering Extras cover will not make you wait when you switch to a new health fund provided you had an existing policy with similar cover.

In order to avoid a new waiting period, no more than seven days must pass between the time you were covered by your old health fund and the time the new policy kicks in.

Why Waiting Periods Make it Important to Maintain Cover

It is important to buy hospital and Extras cover when you are healthy. This way, you can wait out any waiting periods before you need costly medical treatment. You never know when you will become sick, and you don’t want to need cover and be unable to get it. Having cover today gives peace of mind of knowing that you can get the treatment you need.

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

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