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What do the changes to private health insurance mean for you?

Confused? That’s okay. Image: Getty

On April 1st private health insurance will receive its biggest shakeup in over a decade. Along with premiums rising by an average of 3.25 per cent (an extra $135 a year for the average family), new government reforms also come into effect.

These changes are intended to make private health insurance easier to understand and more affordable for more Australians. But just days out from April 1, it seems many customers are even more confused than ever.

So if you have private health insurance, what exactly do these changes mean for you?

1. Introduction of Gold/Silver/Bronze/Basic product tiers for hospital cover

For the first time, private health insurers will be required to categorise their hospital products into four easy to understand tiers; Gold, Silver, Bronze or Basic.

Under the new system there are minimum standards for hospital services and treatments to be covered under each tier and all policies within a tier must meet that minimum standard.

This means all products in the same product tier will cover the same services and treatments as all other policies in that tier – for example, all silver policies must cover heart & vascular system while all gold policies must cover pregnancy and birth related services.

What you are and aren’t cover for will be based on new minimum standard clinical categories. Clinical categories are simple ways to describe types of hospital treatment. If a policy covers a certain clinical category, then it must cover everything within the category.

These changes will hopefully make it easier for you to compare policies and to understand exactly what you are and aren’t covered for.

2. Option to increase excess in exchange for lower premiums

Excess is an amount you agree to pay towards the cost of your hospital treatment. The higher the excess, the less you pay for your premiums (the amount you pay monthly).

Previously, the maximum permitted excess for private hospital insurance was $500 for singles and $1,000 for couples and families. From April 1, you may be able to increase your excess from $500 to $750 for singles and from $1,000 to $1,500 for couples and families. Opting for a higher excess could result in savings of up to $200 for singles, and $350 for families.

Not all funds and policies will offer this benefit so it’s best to speak with a health insurance expert like iSelect to find out how can save by opting for a higher excess.

3. Discounts for young Australians

This change is great news for young Australians who may be struggling with the cost of private health insurance. From April 1, those under 30 may be eligible to receive up to a 10 per cent discount of their premiums depending on your age.

The discount maximum for 18 to 25 year olds is 10 per cent. So the younger you are, the biggest discount you could enjoy!

Again, not all funds and policies will be offering this benefit so if you are under 30, its worth shopping around to find a policy that offers the discount.

4. Removal of some natural therapies

Some (but not all!) natural therapies will no longer be covered under extras policies. Therapies that will still be covered include remedial massage, Chinese medicine, mythography, acupuncture.

Pilates that is provided by a registered physiotherapist may still be claimable under your physiotherapy limits (this could vary between funds). You can check the full list of therapies that will no longer be covered from April 1st here.

5. Travel and accommodation for regional Australians

If you’re one of the many Aussies that live in a regional area, you may be wondering how the recent changes to private health insurance could affect you.

Those living in regional areas often have to travel to metro areas to receive hospital treatments, which can be expensive.

In the past, travel and accommodation benefits could only be covered under extras policies. However, the new changes will mean that insurers can now cover the cost of any travel and accommodation required for in-hospital treatments as part of your hospital cover. Again, this will vary between funds and policies so take the time to compare.

Jessie Petterd, iSelect health insurance expert and spokeswoman. 

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