Should you change your health insurance after April 2019?

You might have already heard about the major changes due for Australia’s private health insurance industry in April 2019. These reforms were announced back in October 2017 and they’re some of the biggest changes in recent decades. They impact everything from cover classification and discounts for young people, to mental health and natural therapies coverage.

But why are these changes happening and how will they change things for you and your coverage? And should you change your health insurance policy after April 2019? We look at these changes, whether you should update your policy, and how to switch your policy if you do decide to change.

What are the April 2019 changes to health insurance regulations?

Starting April1st 2019, hospital insurance policies will be categorised into four categories: basic, bronze, silver, and gold. All hospital-based treatments have been designated into 38 categories, and minimum standard clinical categories (or coverage for these) will apply to each of the four policy tiers. The new categorisation framework is designed to make it easier to compare and understand policies. Providers will have until April 2020 to adopt the changes in full.

In addition, insurers can now offer discounted cover for young people, offer higher excesses for lower premiums, and include travel and accommodation benefits for policy holders who need to travel, for hospital treatment. The changes, with some rolling out earlier, also include changes to mental health and natural therapies services.

What to consider before switching insurance policies

So do the April 2019 changes mean you should switch your hospital policy before the changes take effect? Generally, it’s probably best not to make a switch before April 2019 unless you know you’ll lose cover for a hospital treatment you need or if you need to re-serve waiting times for something you need.

Additionally, if you switch before April 2019, it could be hard to work out what you’re switching to because new policies will be released during that time. Your health fund will notify you of what is happening to your current policy.

If you’re thinking about switching, here’s what to consider beforehand.

  • Waiting periods – You’ll need to serve a waiting period if you’re upgrading to a higher tier, whether with the same insurer or a new one. If you’re staying at the same level of cover, you won’t need to re-serve waiting periods for the same treatment categories even if you’re switching to another provider.
  • Lifetime Health Cover (LHC) loading – Switching to a different policy usually won’t affect yourLHC loading as long as you continue to maintain hospital cover.
  • Level of cover – The new policy might be cheaper, but does it offer you an adequate level of cover? Consider benefit limits (individual, family, and policy) and treatment categories, and assess these against your lifestyle, health status, and any changing needs.
  • Excess – What’s the excess? You could opt for a higher excess, which usually lowers your premium.
  • Gap payments – Do you have to go with members’ choice providers to avoid out-of-pocket expenses?
  • Premiums – Premiums or cost shouldn’t be the only factor when choosing a policy. The product should be sufficient for your coverage needs. Balance cost with coverage when thinking about changing your policy.
  • Health needs – Consider your current health needs as well as future ones when picking a policy. If your circumstances have changed or will change, ensure your new policy reflects the changes. Anticipating future needs could help you avoid waiting periods and delays.

How to switch insurance policies

If you’ve done the research and decided to switch, check out these steps. They outline the basic switching process and help you understand how to get it right.

  • Quote – Start with a detailed quote for the policy you want. Take LHC loading and government surcharges and rebates into account.
  • Apply – Apply for cover and have it start only when your old cover expires.
  • Clearance certificate – Ask your old fund to give you an itemised claims statement and a clearance certificate. These are records of your cover and helps with things like avoiding re-serving waiting period. Send a copy of these to your new fund.
  • Cancel – Now you’re ready to cancel your old cover with your current fund.
  • Start new cover – Your cover should start as soon as you’ve cancelled your old cover.
  • Check – Double check your bank statements to make sure your old cover has been cancelled. Also check you’re being debited for your new policy.

Knowing if switching is right for you

The April 2019 changes to health insurance could impact your existing policy, and once the changes have been adopted by insurers, it could be a good time to review your cover. If you’re thinking about switching providers or upgrading your policy, take into account things like waiting periods, level of cover, and loyalty bonuses and discounts. Remember to anticipate your near-future healthcare needs as you choose a new policy, and plan your switch so the process goes smoothly.

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