More than half of Australians have private health insurance.
About a quarter, or about 4 million people, are members of Medibank, Australia’s largest health insurer and the company at the center of the current cybersecurity breach.
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Medibank has pledged to support affected customers.
However, such violations may cause some customers to consider changing companies.
Others may want to change companies for other reasons, such as wanting a better deal.
Here are some tips to get you started.
why switch?
Prior to this latest cybersecurity breach, finding cheaper coverage was the most common reason for wanting to change private health insurers.
This is probably due to annual premium growth, which until recently has outpaced inflation.
Other reasons for switching include dissatisfaction with your bill, looking for additional policy benefits, or trying to avoid exclusions (service not covered).
It is also possible that existing coverage no longer meets someone’s health needs and lifestyle.
The Commonwealth Ombudsman provides a guide to the common types of situations you’ll encounter when switching health insurance providers and what to expect.
Switching could lead to a better match between what consumers need from health insurance and what the insurance covers.
People may also get value for money.
It also has the added bonus of encouraging competition among companies and encouraging insurers to design higher value insurance products.
how do you compare
Switching health insurance companies can be daunting.
However, some websites, such as iSelect and finder, compare markets and offer product and cost comparisons.
These sites compare less than a third of all insurers, limiting your chances of getting a better deal.
A lesser known option is to use the government website privatehealth.gov.au.
It contains details of all policies available in Australia.
You and your family may be eligible for restricted insurance companies based on your industry or occupation.
These may offer policies with lower premiums and greater benefits as profits are passed on to members.
Contract terms, including waiting periods, may be more flexible due to limited funds.
Government reforms have introduced four product tiers (Gold, Silver, Bronze, or Basic).
These are based on standard clinical categories that designate inclusions and exclusions.
All insurers are now required to classify their products into these tiers, making comparisons between insurers easier.
What else do you need to know?
Waiting Periods, Discounts and Fees
When you switch insurance companies, your old health fund will issue a clearance certificate to your new fund, and the amount you have already claimed for the year will carry over to your new policy.
If you switch to a similar level of coverage and your payment with your previous insurance company is up to date, any waiting period already provided will also carry over.
However, a waiting period may be required for new benefits and coverages to apply under the new policy. Please check with your new insurance company on this matter.
There are no withdrawal fees to switch, and some funds offer discounts to new members, subject to a cap of 12% per annum.
A change of insurer should not affect your lifetime health insurance status. This is a government incentive to encourage people to purchase and maintain hospital insurance to avoid age-based burden of premiums after age 30.
This is only to maintain hospital policy on an ongoing basis.
Insurance companies cannot deny coverage or charge additional fees based on pre-existing health conditions.
They charge the customer the same price for the same policy regardless of whether the customer is a switcher or not.
However, people between the ages of 18 and 29 are entitled to discounts of up to 10% on premiums.
Overages and Exclusions
Insurers can increase your voluntary excess levels (the amount you pay out of your own pocket before health insurance coverage begins) in exchange for a lower premium.
You can also exclude certain medical conditions from your health insurance to save money.
However, before switching to such a policy, you should evaluate whether these options are right for you.
You’re not the only one who finds it difficult
Despite the potential benefits of switching insurers, only about 1.5% of all insured persons switch insurers each quarter.
A previous Australian Competition and Consumer Commission report found that 48% of consumers surveyed were thinking about changing insurance providers, but only 14% had actually done so.
This may reflect a perception of the complexity of health insurance policies and the difficulty of switching leading to a tendency for people to ‘set it and forget it’.
How can we make the switch easier?
With the annual price increase scheduled for April each year, some may reassess their need for insurance.
Governments can increase the “trigger” to switch by encouraging consumers to reassess their situation.
Advertisements for private health insurance often increase during this time.
Governments can also provide information that helps people compare what they are paying compared to their peers.
If people find themselves paying more than others for similar coverage, that may be a good incentive to switch.
People may also consider switching if they find that the level of cover they have chosen does not match their peers.
However, some consumers may not be “prompted” enough to switch.
Most people who buy hospital insurance take out private health insurance to avoid paying additional Medicare taxes.
These types of consumers may be less likely to value health insurance as their healthcare needs change.
This article first appeared in The Conversation.
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