Do you feel like you’re paying over-the-top health fund premiums for underwhelming payouts? I have some intel that could fix that.
Buried deep in the data of a ‘boring’ report called the State of the Health Funds, three health funds stand out on three different measures: the fund that returns the most premiums to members as payouts, leaves you with the least out-of-pocket costs and pays back the most on extras.
I can also reveal the fund people love so much that they never leave.
The health fund that pays back the most premiums
HBF pays the highest benefits as a percentage of contributions, 88.1 per cent, while NIB pays the least at 73.5 per cent.
For comparison, the median premium return is 80.8 per cent but there are plenty that give back north of that figure.
“Insurers will generally aim to set premium levels so that contribution income covers the expected costs of benefits plus the insurer’s administration costs,” the report said.
But at what price to the member? What gap is good, average and bad?
The health fund with the lowest out-of-pocket hospital cost
For this, there is only an average of all the policies offered by particular insurers – not figures that are indicative of any single policy. And remember, policies differ in the range of treatments that are covered and to what extent, the required level of excess or co-payment if you go to hospital, and the prices and discounts you can access.
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But for the proportion of hospital-related charges covered, HBF comes top at 94.4 per cent. AIA Health is bottom of the table at 81.6 per cent.
On this crucial measure, there are wide variations between states so a median is not terribly useful as a benchmark. You can find all the funds, for each state, in the table on page 20 of the report.
The ombudsman said: “In some states, insurers can cover gaps more effectively because doctors in that location charge less than the national average. In addition, where a doctor’s fee for an in-hospital service is at or below the Medicare Benefits Schedule fee, there will be no gap to the member.”
Naturally, Medicare rebates are a factor in your gap as well and can top up the health fund payout to make the treatment no-gap. Of course, when it comes to private health, it’s not just about hospital cover, but also the extras you can access.
The health fund with the most generous extras policy
What you claim in extras can go a long way towards ‘paying’ your premiums.
The main categories of extras or ancillary cover are dental, optical, physiotherapy and prescription medicines that are not on the Pharmaceutical Benefits Scheme.
Of the proportion of general treatment costs covered, again the data are not policy- but provider-specific - so bear in mind that, if you pay for a higher-tier policy, you can expect higher per-treatment payouts.
The largest percentage of charges covered here is by St Luke’s at 57.3 per cent while, at the opposite end of the scale, CDH covers just 34.5 per cent. There is a slew above 50 per cent.
The excellent and independent privatehealth.gov.au lets you key in your exact health fund needs and wants, and comes up with your top options, with regard to price.
As the final piece of the health-fund-pedigree puzzle, just know that, while the State of the Health Funds report says AIA Health has held on to only 69 per cent of its members over a two-year period, HCF has the highest member retention of any fund - 98.6 per cent.