UNDERSTANDING PRIVATE HEALTH INSURANCE
Understanding Private Health Insurance is important, as it can provide you with essential coverage for medical expenses beyond what Medicare offers.
UNDERSTANDING PRIVATE HEALTH INSURANCE
Understanding Private Health Insurance is important, as it can provide you with essential coverage for medical expenses beyond what Medicare offers.
What is Private Health Insurance?
Private Health Insurance is a type of insurance policy which aims to assist people with the costs of inpatient medical services, as well as healthcare services, which aren’t covered by the Australian public healthcare system through Medicare. It also provides cover for the costs of accessing treatment in a private hospital.
To maintain the type and level of healthcare coverage which is provided to you during your time within the ADF through Joint Health Command and the ADF Family Health program, obtaining private health insurance for you and your family is something you might want to consider.
With private health insurance, you not only get more affordable access to private healthcare, but you are also given more choice. Choice to choose your own doctor, specialist, or hospital, and the option for faster and more convenient treatment through the private hospital network. Think of private health insurance as an extra layer of protection to help you pay for the healthcare you need, when you need it.
Private health insurance comes in two forms:
To assist with the costs of being admitted as a private patient. These costs can include accommodation, surgery, and medical procedures.
Extras cover helps manage the costs of maintaining your health beyond what is offered within a hospital. It covers your everyday health care services such as dental, optical, and physiotherapy.
The Benefits of Private Health Insurance
As of 31 March 2024, over half of the Australian population (54.6%) had private health Extras cover, and 44.8% had private Hospital cover (Source: APRA). A substantial number of Australians have chosen to invest in private health insurance for a number of important reasons, including greater healthcare control and tax incentives.
Some of the benefits of private health insurance are:
- Choice and control
One of the benefits of private health insurance is its ability to give you the option of selecting your preferred surgeon or specialist, as well as the hospital at which you can receive treatment. It allows you to receive treatment as a private patient in a private hospital, where you can enjoy your own private room (subject to availability). You can also be covered as a private patient in a public hospital as well.
- Timely access to care
Private health insurance provides faster access to specific medical treatments and surgeries by bypassing the lengthy public hospital wait lists. While treatment in a public hospital is typically free of charge, Australia’s public healthcare system is currently dealing with various challenges. Waiting times for elective surgeries, such as joint replacements or bariatric surgeries, have significantly extended, some stretching to several years. These prolonged waiting periods can impact patients’ quality of life and delay their access to necessary medical interventions. As a result, individuals seeking more timely and personalised care often turn to private health Hospital cover to secure faster treatment options and mitigate the potential burden of extended waiting times.
- Tax incentives
The Australian government uses the tax system to encourage people to take out private health insurance to minimise the burden on the public health system. One of the ways the government does this is to offer tax incentives to those individuals who take out private health insurance. For example, having private health insurance can help you avoid the Medicare Levy Surcharge (MLS). The MLS increases the amount of tax paid if you don’t have private Hospital cover and earn above a certain income. The Australian Government also uses the Rebate on Private Health Insurance, which is a financial contribution from the Government paid towards the cost of your private health insurance premiums to make your cover more affordable.
- Peace of mind
Another one of the benefits of private health insurance is that it can offer a sense of safety and peace of mind, giving people assurance that they have financial coverage for any unexpected medical expenses and emergencies which may arise. It also gives them affordable access to over 500 private hospitals in Australia, which supports timely treatment that won’t impact their quality of life if their health takes a turn.
- Reduce out-of-pocket expenses
Extras cover provides benefits for ancillary services that are not covered by Medicare, which can be expensive per visit such as dental, optical, podiatry, chiropractic and more. It can help you reduce your out-of-pocket expenses for these healthcare services and helps lower the risk of unexpected expenses.
What is Hospital Cover?
Hospital cover is designed to help with the costs of your treatment as a private patient. Depending on the level and type of Hospital cover you choose to take out, most costs associated with your hospital stay may be covered, with some out-of-pocket expenses applicable.
What’s covered by private hospital cover during your hospital admission:
- In-patient medical treatments requiring surgery and other investigative procedures.
- Day surgery
- Hospital stay (private room where available)
- Special care unit accommodation (e.g., intensive care)
- Operating theatre fees
- Ward-medication and sundry medical supplies relating to your admission (e.g., painkillers, dressings)
- Nursing care
- Patient meals
How much will I need to pay?
The Medicare Benefits Schedule (MBS) is a list of medical service fees set by the Australian Government for all services covered by Medicare, applicable to both public and private patients. Medicare will pay 75% of the Medicare Benefit Schedule fee for in-hospital medical services when you receive treatment as a private patient, and your private health insurer will pay the other 25%, if the service category is covered by your policy.
However, if your doctor or specialist charges more than the MBS fee for their service, you may have to pay an ‘out of pocket expense’, which is known as a gap payment. It is the amount of money that you will be required to pay as a result of your medical practitioner charging above the set (or scheduled) MBS fee for your treatment.
Before you schedule a procedure, it is important you ask your practitioner their costs and speak to your private health insurer so you have an understanding of the costs that may be incurred.
What is Extras Cover?
Private health Extras cover, sometimes referred to as Ancillary cover, provides cover for a range of out-of-hospital services that aren’t typically covered by Medicare. These services are usually ones which you may rely on regularly throughout the year and can attract ongoing costs each time you visit. Extras cover is designed to help individuals and families with the costs associated with these services. Depending on your level of cover, services may include:
- Dental: General dental for regular cleans and checkups as well as major dental services such as extractions, periodontics, or dentures.
- Optical: Single vision, bifocal or multifocal lenses and frames as well as contact lenses.
- Natural Therapies: May include coverage for acupuncture, remedial massage, myotherapy, exercise physiology and more.
- Physiotherapy: Initial physiotherapy consultations, follow-up consultations, treatment plans and rehabilitation.
- Chiropractic: May include cover for initial and subsequent consultations, and X-Rays.
- Ambulance Services: In some cases, Extras cover may help cover the cost of ambulance services.
When taking out private Extras cover, you will need to choose the level of cover that you think suits you best. While higher levels of Extras cover will provide higher benefit limits on a wider range of services, they are typically more expensive. Choosing the right level of cover for you or your family is highly dependent on your lifestyle, health needs and budget.
Waiting Periods, Annual Limits and Restrictions
Waiting Periods
A waiting period is a set amount of time during which a policy holder must ‘wait’ after taking out their cover before they can claim on certain benefits. The Government has set standard hospital waiting periods for the private health insurance industry to follow. Some include 2 months for general hospitalisation and 12 months for pregnancy and birth-related services.
The good news is, if you are transitioning out of Defence and join Navy Health within 90 days of your discharge date we will waive all waiting periods on your policy, including any waiting periods for pre-existing conditions.
Pre-Existing Conditions
A pre-existing condition is any condition, illness, or ailment that in the opinion of a doctor, you had signs or symptoms of during the six months before you took out a Hospital policy, or upgraded to a higher Hospital policy. Navy Health utilises an independent doctor to make these impartial determinations on our behalf.
When you take out private health insurance with a pre-existing condition, you will typically have a 12-month waiting period before being able to claim for hospital treatments or services relating to that particular condition. However, if you join Navy Health within 90 days of discharging, we will waive this waiting period for all pre-existing conditions.
Restrictions and Exclusions
Depending on your selected level of Hospital cover, some exclusions and restrictions may apply. A restriction on your Hospital cover means you will be covered as a private patient in a public hospital only for this specific service. If you are treated for this service in a private hospital, you may be significantly out-of-pocket. An exclusion on your Hospital cover means your policy doesn’t cover that service as a private patient and you will need to be treated as a public patient in a public hospital. Read more information regarding restrictions and exclusions here.
Annual Limits
It is important to keep in mind that your extras cover will likely have annual limits. Annual limits are the maximum amount that you can claim for each covered service per year. These limits reset yearly, depending on your health fund’s policy terms. At Navy Health, in most cases, the annual limits on your Extras policy will be renewed at the start of each financial year (1st July).
In addition to the overall annual limit for each service, there is usually also a set benefit limit per visit or consultation. For example, Navy Health’s premium Extras cover includes Occupational Therapy services with a $500 annual limit per person. For initial consultations, you can claim a set benefit of $60, and for subsequent consultations, $40. However, once your claims for the year reach the $500 limit, you won’t be eligible for further claims until the benefits reset.
It’s important to note that some Extras services, such as Natural Therapies or Chiropractic and Osteopathy, have family limits. For example, Premium Extras cover for Natural Therapies is subject to $550 annual limit per person, and $1,100 per family.
Before selecting the level of Extras cover which aligns with your personal healthcare needs, it is important to research and understand the details of each product, including the services covered and not covered, annual limits, set benefit limits per service, and waiting periods. If you need help selecting the product that is right for you, give us a call on 1300 306 289.
Young Adults and Dependants
It varies amongst insurers; however, many health funds will allow adult children to stay on their family’s health insurance policy well into their twenties. This can be a cost-effective solution for families hoping to lower costs when it comes to keeping their family covered.
At Navy Health, young adults can be considered a dependant until they are 31 years old, provided they qualify as full-time students. As a dependent, you are able to remain covered under your parent’s membership (both Hospital and Extras) in certain circumstances.
Once you turn 22, to remain covered under your parent’s membership you must be studying full-time at a tertiary institution (as well as not married, or in a de facto relationship). To be eligible, your parent must complete a Student Declaration form found here to retain your coverage.
If you are not studying full time, young adults up to the age of 27 have the option of taking up a Young Adult Membership, which is Extras-only cover. A Young Adult Membership allows you to take the first step towards your own independent health cover. You will remain on your parents’ Hospital cover provided you take out your own Young Adult Membership Extras policy and satisfy the below criteria.
- 1. You are over 22 years of age, but under 27 years of age.
- 2. You are not studying full-time.
- 3. You are unmarried and not in a de-facto relationship, and
- 4. Your parent's membership is still current.
If you are not eligible for Young Adult Membership and not studying full-time, you can take out your own cover with Navy Health, with no waiting periods (conditions apply).
