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Insurers offer the benefit of a 30-day cooling off period. If you are not happy with your choice in the first 30 days after joining, and haven’t made a claim for benefits on the new policy, you can request a refund of any contributions you have paid.
The benefits for hospital related costs and medical bills will vary according to whether the hospital is or is not a designated Participating Hospital.
Prior to admission, you should contact your health fund to confirm that the hospital you have chosen is on their Participating Hospital List.
If you use a non-participating hospital there may be considerable out-of-pocket expenses. It is important to call your fund to enquire what they would pay at a non-participating hospital, to ensure you don’t receive a nasty surprise.
Medical expenses incurred in hospital are reimbursed to at least 100% of the Medicare Scheduled Fee – 75% is refunded from Medicare, whilst the remaining 25% refund from your health fund will cover some or all the costs of:
Drugs, dressings and other consumables,
Prostheses (surgically implanted),
Any additional doctor’s fees.
Some funds offer a ‘No Gap/Known Gap’ scheme and if your doctor participates, you may be fully covered for all admissible medical expenses. Members should check with their fund prior to an admission to confirm whether there will be any out of pocket expenses for a medical service.
The benefits for hospital related costs and medical bills will also vary according to whether the hospital is or is not a designated Participating Hospital.
A pre-existing condition is defined by law as any ailment, illness, or condition that you had signs or symptoms of during the six months before you joined a health insurance policy or upgraded your cover. It is not necessary that you or your doctor knew what your condition was or that the condition had been diagnosed. A condition can still be classed as pre-existing even if you hadn’t seen your doctor about it before joining a fund.
When deciding whether an illness is pre-existing, the health fund will appoint a medical practitioner who will make a determination as to whether the illness is pre-existing.
Different health funds have different rules around this item. Most funds will allow a lapse of either 30 or 60 days. To find a health fund that best suits your circumstances, please give us a call.
If you want to move from one fund to another, you will not have to re-serve waiting periods if you transfer to a policy that is at the same or a lower level of benefit. Your new fund must give you continuity for the waiting periods you have already served. However, if your new plan includes new or higher benefits that were not part of your old policy, you will have to complete a waiting period before you can access those benefits.
Benefits paid by the previous fund may be taken into account by your new fund when it determines your annual benefit limits.
All health funds have the same waiting periods for new members taking up a Private Hospital Cover. Waiting periods are normally 12 months for any pre-existing conditions, obstetrics and reproductive relates services, whilst a 2 month wait for all new conditions, any psychiatric care, rehabilitation or palliative care.
Waiting periods for Extras items (dental, optical, physiotherapy etc) vary from health fund to health fund and item to item.
If you have moved to Australia and are aged over 31, you have one year from the date you registered for Medicare to take up Private Health Cover without being penalised. You will have been sent a Medicare registration letter which confirms the date you were first registered. If you send this to the fund, any LHC loading will be removed if you take up cover within the one year timeframe.
A Clearance Certificate, sometimes called a 'Transfer Request Form', is a complete record of your Private Health Insurance history. It shows details on the length in time you have held Private Health Insurance, if there is any relevant LHC and shows any previous claims you have made against your existing policy. When transferring between funds, this important record of your history is sent to the new fund you have chosen and will be used to confirm all the waiting periods you have previously served will not be re-applied to the new policy, tells the new health fund any loading that applies and will inform of any claims made to be deducted off your new annual limits as you cannot transfer for financial gain.
The importance of a Clearance Certificate is to show continuity, so you are never disadvantaged.
If you are transferring between funds or re-joining Private Health Insurance, you may need to obtain your Clearance Certificate to confirm previous loading and any wait periods if any, that you have already completed.
If you have been living overseas, an International Movement Certificate is needed to confirm entry and/or exit from Australia, if you are aged over 31. This requests an International Movement record from the Department of Immigration and Border Protection and allows your insurer to adjust your LHC Loading as appropriate.
If you think loading may apply to your circumstances, call one of our experienced advisors, who will be able to talk you through your situation.
Once you’ve taken up private hospital cover and maintained a membership for a minimum of 12 months, you can cancel it for up to 1,094 days (3 years minus 1 day) during your life, without it affecting your loading. Days of Absence do not apply until after you have taken up hospital cover for the first time.
You are not required to pay LHC loading in the following circumstances:
If you were born before 1 July 1934
If you hold a Department of Veterans’ Affair (DVA) Gold Card
If you are a member of the Australian Defence Force (ADF)
· If you are discharged before your 31st birthday, normal rules apply.
· If you are discharged after your 31st birthday, you will have 1094 days to join a fund without incurring LHC loading.
· If you are discharged after your 31st birthday, and already had LHC loading prior to joining the ADF, your loading will return to what it was previously.
If you were an Australian living overseas
· If you were overseas on the 1st of July following your 31st birthday, you have one year (from the anniversary of the day you return to Australia) before you are required to have Private Hospital Cover.
· If you are over 31 and overseas on 1 July 2000, you are not subject to loading if you take up Private Hospital Cover when you first return to Australia. However after 90 consecutive days at any stage of being back in the country you will start to use your Grace Period (this is called the 90 day allowance). If you exceed your Days of Absence of 1094 days you will incur a 2% loading every year after that without cover.
If you have recently moved to Australia
· If you recently migrated to Australia, you must take up Private Hospital Cover before 1st July following your 31st birthday or within 12 months of registering for Medicare, whichever is of the later. If you do not take up Private Hospital Cover before these dates you will incur a LHC loading of 2% for every year you are aged over 30.
An Extras cover will not help you to avoid either the Lifetime Health Cover (LHC) loading or the Medicare Levy Surcharge (MLS). It must be a Private Hospital Cover.
You might incur further LHC loading when re-joining Private Hospital Cover. This loading is additional to any previous loading and will continue to rise by 2% a year to a maximum of 70%. You do have 1094 days (three years minus one day) that you can be uncovered without incurring additional loading, however this applies across your whole lifetime.
Every year you delay taking out Private Hospital Cover after your 31st birthday, an extra 2% loading will be applied to your premium for every year you delay taking it up.
For example, if you are 40 years old and take out Private Hospital for the first time, you will incur an 18% LHC. If the premium was originally $100 per month, you would have to pay $118 per month for 10 consecutive years until it eventually drops off your policy price. The LHC was introduced in 2000 to incentivise people to take out Private Hospital Cover to both eliminate stress from the public system. However, the longer you leave it, the more expensive it becomes.
The maximum a LHC can reach is 70%. As such, Private Hospital Cover can become expensive if you do not meet the deadline and then decide to take it out later in life.
Lifetime Health Cover Loading (LHC) is only applied to those who are over the age of 31. To avoid LHC, you must take out, as a minimum, a basic level of Hospital Cover prior to the 1st of July following your 31st birthday. By holding onto this Private Hospital Insurance continuously, you will never be subject to any LHC. If you do experience any financial hardship or travel overseas, you can cancel or suspend your policy with your health fund, pending their approval. Should you let your hospital cover lapse, you have 1094 days (one day short of 3 years) to purchase Private Hospital Insurance to avoid LHC.
Unfortunately, Extras-Only Cover will not help you to avoid LHC.
Lifetime Health Cover Loading was introduced in the year 2000 as a Federal government initiative, and applies to people aged over 31 (the deadline being 1st July following your 31st birthday). If you do not hold a Private Hospital Cover you will incur a 2% loading every year you don’t have cover. This loading will be added to the cost of your insurance and increases each year you do not hold hospital cover, up to a maximum of 70%.
In Australia, we are fortunate enough to have a good public health system and the added protection of Medicare to cover things like Bulk Billing at a GP and public hospital admissions. The issue with this, however, tends to be the waiting periods involved for public hospital admissions and the lack of flexibility and choice of which doctor or specialist will preform the surgery.
Enter Private Health Insurance (PHI).
PHI is designed to do what the public health system cannot. You will be able to choose your own preferred surgeon, whether it be a specialist or not. You will be able to reduce your waiting periods dramatically to have elective surgeries when you choose. You would be entitled to a private room within a private hospital which is nice. PHI also allows you to save further money on certain things like dental, optical, therapies, pharmacy and medical appliances that the public health system does not allow. Another great thing about PHI is that if you are earning over the taxable income threshold, by taking out at least a basic level of Hospital Cover, you avoid paying the Medicare Levy Surcharge, which can be an extra percentage of your whole taxable income charged at tax time, all for simply not holding PHI.
Another great thing about Private Health Insurance in Australia is that you are never going to be locked into a contract. This allows everyone to freely upgrade, downgrade, swap and change policies whenever their personal circumstance change. If, however, once you make a change on the policy and you feel that it really wasn’t the right choice, you have the added ability to use your right to cool off. This means, that if you are within the first 30 days of signing up to a new fund or policy, and you haven’t made a claim, you can request a refund of any contributions you have paid. Your policy will be cancelled and revert to whatever you had originally.
Every taxpayer in Australia contributes to Medicare in their tax return in the form of the Medicare Levy. However once your income reaches over $90,000 as an individual or $180,000 as a couple, you will also pay an additional 1-1.5% of your income as the Medicare Levy Surcharge, if you do not have a Private Hospital Cover.
To be exempt from the surcharge, your hospital cover must be held with a registered health fund and cover some or all of the fees and charges for a stay in hospital, with a maximum payable excess per year that is no greater than $500 for singles or $1,000 for couples/families.
An Extras cover will not help you to avoid the MLS. It must be a Private Hospital Cover.