Ward off ill effects of health cover overhaul
Sophie Elsworth looks at how your insurance will be hit by big changes
HEALTH insurance members will have their hospital cover reclassified this year as part of one of the biggest shake-ups the industry has seen.
Many hospital policies will be simplified and classified into four categories – gold, silver, bronze and basic – from April 1, when annual premium price changes kick in.
NIB chief executive Mark Fitzgibbon said it would finally allow consumers “to compare apples with apples”.
“Under your policy, if you are covered for eye surgery, it won’t matter what kind of surgery it is,” he said. “Minor or major, if it’s eye surgery, it’s eye surgery.”
Previously, items falling under hospital cover, such as eye surgery, would be classified into subsections, including minor and major surgery.
This made it confusing for members to understand what they would be covered for.
Hospital cover allows patients to choose their own doctor and decide if they want to be treated in a private or public hospital.
Latest Australian Prudential and Regulation Authority data shows that in the September quarter, 11.2 million Australians had hospital cover – the equivalent of 44.9 per cent of the population.
Medibank chief customer officer David Koczkar said it would be contacting many customers to discuss changes to their cover and the impact.
“These new categories are the building blocks for hospital health cover, designed to drive consistency and transparency across the industry and make it easier to compare,” he said. “Insurers will be able to offer additional coverage above the minimum requirements in basic plus, bronze plus and silver plus product tiers.”
Another change this year is the rollout of higher excess costs if customers choose them, to allow their premiums to be Chloe Beer
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reduced. From April 1, singles can opt for a hospital cover excess up to $750 – previously it was $500. Families can choose excesses as high as $1500 – up from $1000.
Health comparison site iSelect’s analysis found singles could save up to $200 a year and families up to $350 a year.
Spokeswoman Laura Crowden said the health system overhauls were designed “to make it easier for customers to compare policies”.
“The reforms should make private health insurance more affordable for many Australians but some customers may need to pay more for an increased level of cover to keep certain benefits,” she said. “But in the short term it will be incredibly confusing for customers as their insurer may change the name of their policy or move them on to new policy with different inclusions and exclusions.”
Figures from iSelect show the average 2018 annual premium costs – with no rebate applied – was $3448 for families and $1925 for singles. Under 30s can get discounts from April 1 of up to 10 per cent off their cover.
Nerida Cole says people should maximise tax incentives.
“Don’t miss out on what you can do now,” she said.
“It’s worth people thinking not just about what they are planning to do this year, but what they think they’re going to be doing in the next couple of years.
“It could be worth bringing forward a strategy to get it into this year.”
This could include putting extra money into super, or buying investments such as property and shares before Labor’s plan to weaken capital gains tax discounts kicks in.
NDA Law managing director Andrea Michaels said the planned changes would only apply to future investments, and it was worth understanding how they might affect your personal situation.
“We don’t know what the final version of any of these policies will look like when they get through parliament,” she said. “Know which issues are applying to you and get your head around them now.”
This could include bringing forward investment property purchases to avoid the potential capital gains and negative gearing overhaul.
“Look at what your portfolio comprises,” Ms Michaels said.
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