Benefit limitation period
You can elect to pay a lower premium for your private health insurance cover in return for agreeing to be covered for lower benefits. You could elect to pay a lower premium and take out a hospital cover policy with one or more benefit limitation periods.
A benefit limitation period is where you are only entitled to restricted benefits for a particular condition or treatment for a set period of time. For example, you may decide to take out a private health insurance policy that covers full benefits for various conditions or treatments but only pays restricted benefits for knee replacement surgery for the first two years of membership of that policy. After two years membership on the policy you would normally be entitled to full benefits for knee replacement surgery.
However, where a waiting period already applies for a particular condition or treatment, (for example, a pre-existing condition 12 month waiting period), some funds may commence the benefit limitation period from the end of this initial waiting period. If the waiting period was 12 months and you elect a two year benefit limitation period for this condition or treatment, you would not be entitled to receive full benefits for three years from when your membership on that cover commenced.
You should check with your insurer to ensure that you fully understand the implications of benefit limitation periods in your health cover.
Private health insurance premiums are not risk rated like other forms of insurance, so that all consumers pay the same premiums as others for the same policy, regardless of their age or health status. As set out in the Private Health Insurance Act 2007, to ensure that everybody who chooses has access to health insurance, the principle of community rating prevents private health insurers from discriminating between people of the basis of their health or for any other reason.
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Co-payment (some funds also refer to a co-payment as an "overnight excess"
You can elect to pay a lower premium for your private health insurance cover in return for agreeing to be covered for lower benefits. You could elect to pay a lower premium and take out a hospital cover policy with a co-payment.
With a co-payment, the member agrees to pay an agreed amount each time a service is provided. For example, a policy may have a co-payment clause that requires the member to pay the first $50 for each day's hospital accommodation. If your policy has such a co-payment and you were in hospital for five days, you would have to pay $250 ($50 x 5). The total amount of co-payment a member can pay in a year is often limited to a set maximum amount.
Excess or Front-end deductible
You can elect to pay a lower premium for your private health insurance cover in return for agreeing to be covered for lower benefits. You could elect to pay a lower premium and take out a hospital cover policy with a front-end deductible (excess).
A front-end deductible is an amount of money a member agrees to pay for a hospital stay before health fund benefits are payable. For example, if your policy has an excess of $200, you will be required to pay the first $200 of your hospital costs should you go to hospital as a private patient. A front-end deductible could apply every time that you go to hospital in a year, or it may be capped at a total amount that you would ever have to pay in a year. If you are unsure how the excess on your policy works you should ask your health insurer.
Most health insurers do not require you to pay the excess amount if you have day surgery.
You can elect to pay a lower premium for your private health insurance cover in return for agreeing to be covered for lower benefits. You could elect to pay a lower premium and take out a hospital cover policy with one or more exclusions.
If your private health insurance policy features an exclusion for a particular condition you are not covered for treatment as a private patient in a public or private hospital for that condition. For example, if you purchase a private health insurance policy that excludes maternity, hip replacements and knee replacements, and you go into hospital as a private patient for one of these conditions, your insurer will not pay any benefits towards your hospital and medical costs.
If you are unsure which conditions are excluded on your policy, you should ask your health insurer.
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The 'medical gap' is the difference between the doctor's fee for services provided in hospital and the combined Medicare benefit and health insurance benefit. The patient must pay this amount, unless the health insurer has a negotiated agreement or gap cover scheme in place.
You may also need to make a payment from your own pocket for non-medical hospital services, consultations in a specialist's rooms, or ancillary services.
Medicare Benefits Schedule (MBS)
The Government sets a schedule of medical fees - called the Medicare Benefits Schedule - based on a fair price and how much Australia can afford to pay for the total health system. Whether you have private health insurance or you are a private patient paying for all your own costs, the Government provides a rebate on nearly all medical fees. This rebate is currently 75% of the MBS fee for in-hospital medical fees and 85% of the MBS fee for medical fees incurred out of hospital.
Health funds are able to impose a maximum 12 month waiting period for hospital treatment for ailments, illnesses or conditions that are considered to be pre-existing.
The Private Health Insurance Act 2007
, specifies a pre-existing ailment as an ailment, illness or condition, the signs or symptoms of which, in the opinion of a medical practitioner appointed by the health fund, existed at any time during the six months prior to the member taking out hospital insurance or upgrading to a higher level of hospital cover.
What this means in real terms is that:
- the sign or symptom of the pre-existing illness, ailment or condition should have been reasonably apparent or reasonably evident to the contributor; or
- there must be something that would have been apparent to a reasonable GP on a routine external examination if the contributor had been examined.
If you require hospital treatment, but you have less than 12 months membership on your insurance policy, you may not be covered if your condition was pre-existing. The decision about whether your condition is pre-existing is made by your health insurer. It is important to check this with your health insurer prior to your admission to hospital. Remember that your health insurer will need at least a week or so to advise you about whether the pre-existing ailment waiting period applies.
Public hospital (or basic default) table
Some health funds offer policies that have restricted benefits for all conditions. This policy is sometimes called a public hospital table or a basic default table. Under this policy you will be covered for treatment as a private patient in a public hospital, but may face considerable out-of-pocket costs if you were to be treated in a private hospital.
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You can elect to pay a lower premium for your private health insurance cover in return for agreeing to be covered for lower benefits. You could elect to pay a lower premium and take out a hospital cover policy that only pays a minimum level of benefits for certain conditions.
If your policy has restricted benefits for some conditions, you may be covered for treatment as a private patient in a public hospital for these conditions, but only some of the costs will be covered if you are treated in a private hospital. For example, some health funds do not pay benefits for theatre fees, intensive care units, coronary care units, labour wards or same day theatre.
If you are unsure about whether restricted benefits apply to your policy you should ask your health insurer.
Suspension of private health cover
A suspension of health cover means that, with the agreement of your health insurer, you may stop paying your premiums for an agreed period of time. However, you will not be able to claim any benefits from the health insurer for the period of your suspension.
You are still considered to be a member of the health insurer while your cover is suspended. This means that at the end of the suspension period, you can start paying premiums again without having to serve new waiting periods or being penalised under Lifetime Health Cover.
Health insurers determine their own criteria for a suspension of membership. Some of the circumstances for which health insurers may grant suspensions include working or studying overseas, financial hardship or temporary unemployment. These circumstances can vary between health insurers.
A waiting period is the length of time a contributor may have to wait before being eligible for health insurance benefits.
The Government has set maximum waiting periods for benefits for hospital treatment. The maximum waiting periods that health insurers can apply are:
- 12 months for treatment related to a pre-existing ailment
- 12 months for obstetrics and pregnancy related services; and
- two months for all other services.
Health insurers can waive these waiting periods if they choose to do so. Health insurers are able to determine their own waiting periods for general treatment (also known as extras or ancillary) services. You should check with your health insurer if you are unsure whether waiting periods apply to your cover.
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