Health insurance reforms and how they impact on older Australians
Recently the Australian Government introduced health insurance reforms. The reforms were designed to deal with affordability of private health cover in Australia, and make private health insurance more simplified. With this, the greatest change was the introduction of a new classification system to categorise all hospital health insurance cover.
What’s the new private health insurance classification system?
You may already know that the new classification system for hospital health insurance comes under four tiers:
- Gold: Top cover
- Silver: Medium cover
- Bronze: Low cover
- Basic: very little cover
What many aren’t aware of yet is that each tier contains minimum requirements for hospital services that will be covered.
Not to confuse you, but there’s also Basic Plus, Bronze Plus and Silver Plus policies, which cover at least one service more than normal Basic, Bronze or Silver policies. To better understand this, the team at GMHBA provided an example: “A Basic Plus product would have more services included than the minimum requirements for Basic, but less than the minimum inclusions for the next tier above, Bronze.”
With these reforms, if you already have a health insurance policy, your provider will move you into a replacement policy which falls under one of the four tiers.
Unfortunately, items that you were covered for initially may not be the same under the new classification. This means that it’s really important to check your new policy and make sure that it covers you for what you need now, and looking forward to your future needs. For example, if you’re an older person with one or more chronic health conditions, consider which tier will cover you for services such as cardiac surgery, renal dialysis and other age related services such as palliative care.
Looking at your policy under the new tiers means that hospital services are now grouped into standardised clinical categories, bringing consistency across all health funds making it easier to understand and compare. Tony Hall from GMHBA makes a good point stating that “The new systems have been implemented to help consumers choose the right policy for their health needs and compare different health insurance policies across all health funds.” With all of this being said, seniors are large consumers of health care, and it’s so important that they’re covered for their current and future needs. So, as a senior member of the community, do you need to upgrade your private health cover under the new classification of private health insurance?
Do seniors need to upgrade their cover under the new tiers?
As you get older you’re more likely to suffer from chronic health conditions or suffer from illnesses. Therefore, you’re more likely to use hospital services. Under the new classifications, you may have been automatically put on a tier that’s not right for you. The friendly team at GMHBA suggested that following the introduction of the new classification system, it’s a great opportunity for seniors to review their cover.
When you review your cover, you might decide to upgrade your hospital insurance. If you decide to do this, remember that in many instances there’s a 12 month waiting period that applies for conditions/procedures that you weren’t covered for on your existing policy. Talk to your health insurance company about this. In some cases they may be able to shorten the waiting periods or waive them.
But for many older Australians, they won’t need to upgrade their cover. The tier that you’re transferred onto might have all of the coverage that you previously had and feel that you may need in the future. However, reviewing your cover under the new tiers and regularly moving forward will ensure that you remain covered for the services that you require.
Should you take advantage of a higher excess to reduce your premiums?
The health insurance reforms also include the option to pay a higher excess than you were previously able to. By paying a higher excess for hospital cover, your premiums are reduced. This might be a more affordable option in the interim, but it could prove to be more costly in the long term if you have a bout of hospital stays and procedures. If you’re considering paying a higher excess to lower premiums, look into the per annum caps placed on hospital excess with your private health insurer.
Also, when you’re comparing health insurance policies, find out if you’ll have to pay an excess for hospital day procedures. There are several providers that don’t charge this.
Other health insurers have ways that they reduce hospital excess. Where one member on a couples or family policy with GMHBA is admitted to hospital, they will only pay a maximum amount per person rather than the maximum amount per membership, therefore reducing the excess.
Why should you keep health insurance instead of self-funding?
With such a comprehensive public health system in Australia, one may ask the question “Why should I keep my private health insurance?” But what you need to remember is that many hospital procedures are seen as elective surgery, and not an emergency under the public health system. Elective surgery brings with it lengthy waiting periods and consequently further complications such as chronic pain. This affects quality of life, and as you get older, it’s not something that you want to experience.
If you have private health insurance and you’re over 60 years of age, you’ll be more likely to use your hospital health insurance policy more than any other age group. By having private health cover, you’ll avoid lengthy waiting periods for procedures and you’ll get to stay in a private hospital, and have your own specialist/surgeon.
Another point to raise is that you’ll get a higher rebate on your private health cover once you’re over 65. This rebate can be as high as 1/3 of your premium costs once you’re over 70 years old, significantly reducing your out of pocket health care expenses. Even if you’re a single person living alone at home or in residential aged care, there’s still significant rebates based on your age and income.
When considering all of the above, the intention is that private health insurance reforms will be easier to understand, giving ageing Australians a clearer choice over the level/tier of hospital cover that they choose. Remember to frequently review your policy. And don’t be frightened to compare hospital policies, seek advice and choose the cover that best meets your current and future health care needs.