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Private Health Insurance and Waiting Periods

Jonathan February 2nd, 2015 0 comments

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 private insurance coverage 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 general health insurance policies and hospital health insurance policies.

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 insurance coverage for extras when purchasing a general policy 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 insurance provider to the other. When you change hospital coverage, no waiting periods may apply unless you change to a higher tier of coverage then 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 insurer must credit you for the amount of time you waited for coverage with your old insurer.

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 coverage. Benefit limitation periods for hospital cover do not apply when switching to a new insurer providing the same coverage 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. For example, you may have $500 in orthodontics cover after the first year of purchasing coverage; $700 after the second year; $900 after the third year; and $1,100 after the fourth year.  Because insurers 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 insurer about the limitation period that will apply to the medical services you need.

How Long Do Waiting Periods Last?

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

General insurers offering extra coverage set their own waiting periods. These can vary from policy to policy although many insurers have similar wait times. For example, it is common for a private insurer to require a 12-month waiting period for major dental work or for orthotic appliances while the waiting period for a hearing aid or for drugs designed to assist with reproduction may be 36 months.

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

There are different rules for hospital cover versus general 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. Insurers can sometimes impose a shorter waiting period if they choose to do so.

There are no rules for waiting periods for general cover. This means that an insurer can make you wait as long as the company believes is appropriate before providing coverage for specific types of treatments. You need to know the waiting period before you sign up for general health insurance 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
  • 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 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 coverage; or upgrade cover, then your insurer does not have to pay for treatment related to your pre-existing condition for a period of 12-months.

Your health insurer will appoint a medical practitioner to 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 insurer?s practitioner 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 coverage can be made.

A condition is defined as pre-existing if you have symptoms of it within the six months before signing up for insurance or if a doctor would have found it on an external exam prior to the purchase of the insurance policy.  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 insurer is not going to pay for hospital treatment related to the condition until the waiting period has ended. If general treatment is necessary, the waiting periods set by your insurer will apply to determine when coverage 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 coverage. You need to ensure that you sign up for coverage 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 policies do not cover the baby when the child is born. It is advisable to sign up for family insurance coverage that provides for coverage for treatment for your new child before your son or daughter is born 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 an insurance company from making you serve another waiting period when you move from one hospital insurer to the other. If you switch policies to a new carrier or to new coverage with your existing insurer, 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 must carry over. For example, if you have already waited for two months and you switch to a new insurer, that new insurer 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 general coverage. However, most health funds offering general coverage will not make you wait when you switch to a new provider provided you had an existing policy with similar coverage.

In order to avoid triggering a new waiting period, you must switch directly from one policy to the other. No more than seven days must have passed between the time you were covered by your old insurer and the time the new policy kicks in.

Why Waiting Periods Make it Important to Maintain Coverage

It is important to buy private health insurance for hospital and general coverage 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 coverage and be unable to get it for a year. Sign up for private health insurance coverage today so you can have the peace of mind of knowing that you can get the treatment you need in the future.

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

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