Australian private health insurance customers all over the country are tasked with protecting themselves with a level of cover that is both affordable and high quality.
The recent rise in premiums has led to 500,000 people abandoning private health insurance altogether.
However, with health insurance premiums rising this year by an average 5.59 per cent, the task has rarely been harder. Those looking to take out private health insurance have 34 health funds to choose from and thousands of products to sift through.
The first thing to know is that your health insurance broker can help you by scouring the market on your behalf and guiding you to a policy that meets your budget and quality requirements – the latter being our top health insurance tip.
The second thing to be aware of is that there are an increasing number of junk policies around, which you'll want to avoid.
What is a junk policy?
A junk policy is one of the unfortunate occasions when a policyholder takes out private health cover that is affordable but virtually useless. In their worst forms, people may think they have insurance for a medical issue or accident, but will later find out that their poor-quality policy does not cover treatment for that particular ailment.
1 per cent of all policies fall into the junk category.
It's a serious problem that affects some of our most vulnerable people, and policymakers are understandably trying to limit the sale of these by calling for more transparency and help for people trying to compare health insurance.
Consumer advocacy group CHOICE says that 1 per cent of all policies fall into the junk category, and offer little to no cover for some of Australia's most pressing health concerns, such as cancer, stroke and heart disease. They also don't provide cover for mental health issues, which are growing across Australia.
"If you require reconstructive surgery after breast cancer, private hospital rehab after stroke, or heart surgery, these policies are useless," explained CHOICE Head of Media Tom Godfrey in March.
Their low level of cover also makes them unfriendly to the budget, too, despite many relying on them for that very reason, as Mr Godfrey continued.
"It's ludicrous that consumers pay thousands to insurers for these poor-value policies to avoid government surcharges but have to turn to the public system when they get sick as their insurance is effectively useless."
What could be missing from your policy?
CHOICE also said there are more than 5,000 services in a public or private hospital that are not covered by a junk policy. However, there are a few important and more specific things that could be missing from your policy.
If you don't have cover for at least these five treatments, you could have a policy that is much less than optimal, and doesn't include:
- Post-heart-attack heart surgery
- Rehabilitation in a private hospital after a stroke
- Private hospital psychiatric care
- Your choice of doctor for cancer surgery
- Absolutely any additional benefits for health services
The latter one on this list is part of a pressing issue, brought about by a wish among some to avoid the Medicare Levy Surcharge. With workers who earn more than $90,000 taxed at $900 per year for not having private health insurance (more if they earn in excess of this amount), policies that offer no private healthcare benefits but cost less than this amount have sprung up.
Isn't it better to get a higher level of health and medical treatment should something go wrong for a little bit more money, rather than throwing hundreds down the drain on nothing to avoid a tax payment?
Anyone wanting to avoid a junk policy should spend a little time taking their health insurance needs to heart.
If so, you'll want to avoid a junk policy, as well as the Medicare Surcharge, while still getting that health insurance rebate that makes almost any policy more affordable, provided you earn less than $140,001 per year.
How to avoid a junk policy
Anyone wanting to avoid a junk policy should spend a little time taking their health insurance needs to heart. According to CHOICE, the recent rise in premiums has led to 500,000 people abandoning private health insurance altogether.
While that might not be the best option, especially considering the Medicare levy surcharge and lifetime health cover premium loadings, there is clearly an issue of affordability that needs some fixing.
Before you make a drastic decision regarding your private health insurance, speak to HICA. We're an independent health insurance brokerage, which means we can do the leg work for you and compare the health insurance market on your behalf – and in your best interests.
Our service is also free for singles, couples and families, so you won't have to worry about further hits to your budget. Give us a call on 1300 44 22 01 to speak with someone on your side.