Here’s what you need to know
There are many good reasons to invest in private health insurance instead of relying solely on the public hospital system and Medicare. These include your own choice of doctor, the ability to be treated in a private ward and shorter elective surgery waiting times, to name a few.
Private health cover can be especially beneficial for older Australians, those who are starting a family or people who play a lot of sports. Those in less-than-perfect health should consider private cover as well, as long as they’re fully aware of the strict disclosure requirements that apply to personal and family medical history as well as pre-existing conditions. For any policy-holder, fully understanding your private health fund’s waiting periods is essential.
What are waiting periods?
Many people who are new to private health insurance may be confused about what waiting periods are, why they exist and how long they last. Waiting periods refer to the initial amount of time you must wait before being eligible to claim on your private health insurance policy for certain procedures or benefits. Waiting periods can also apply when you upgrade your cover or access additional benefits.
Waiting periods refer to the initial amount of time you must wait before being eligible to claim on your private health insurance policy for certain procedures or benefits
These waiting periods exist to prevent people from joining a health fund, quickly accessing hospital treatment and then immediately leaving the fund. Without waiting periods in place, people could access a higher level of cover or obtain immediate hospital cover only when they were sure (or suspected) they might need hospital treatment.
Why is this a problem, you ask? It’s a problem because under Australian law, health funds must provide insurance to all Australian residents regardless of their health status. They are not allowed to charge higher premiums based on how likely it is that a particular customer is going to require treatment. Without waiting periods, hospital cover for short-term ‘snatch and run’ users of the system would have to be paid for by long-term health fund members, which isn’t fair. Waiting periods prevent the sort of behaviour that would result in much higher premiums for all health fund members.
Who decides on the length of waiting periods?
For hospital cover, the government sets the maximum waiting periods that private health insurers may impose. New members taking out hospital cover can expect:
- A two-month general wait for any benefits
- A two-month wait for psychiatric care, drug/alcohol rehab or palliative care, whether a pre-existing condition exists or not
- A 12-month wait for benefits for pre-existing conditions
- A 12-month wait for obstetric treatment (pregnancy) benefits
If you decide to upgrade to a higher level of hospital cover (either with your present fund or a different fund), these waiting periods also apply to any of your new product’s additional benefits.
Be aware that taking out extras (general treatment) cover doesn’t cover you for a hospital stay or count toward hospital cover waiting periods. Hospital cover and extras cover are separate products.
On occasion you’ll find an insurer offering a ‘no waiting periods’ deal. Before getting too excited, check which waiting periods they’re talking about.
Hospital cover waiting periods tend to be much the same between health funds, but you will find that individual funds do have a variety of waiting periods for things like overseas visitor cover and extras cover (also called ancillary or general treatment cover), which includes benefits for trauma or TPD (total and permanent disability) cover. Each fund will have its own waiting periods for benefits like physiotherapy, general dental services, contact lenses or glasses, crowns, bridges or major orthodontic care, for example. Depending on the fund you’re in, you also need to be aware of the possibility of Benefit Limitation Periods.
On occasion you’ll find an insurer offering a ‘no waiting periods’ deal. Before getting too excited, check which waiting periods they’re talking about. Usually it’s just the 2-month general waiting period. Make sure you know the details of the offer and which specific waiting periods apply.
What are Benefit Limitation Periods?
Some health funds may impose Benefit Limitation Periods in relation to some of their hospital products. These are initial health fund membership periods during which only a minimal benefit is paid out for specific types of treatment. Depending on the product chosen, these periods can last from between one and three years. These limitations don’t apply if you’re switching from another hospital product, whether with your existing fund or another one.
Make sure you understand if Benefit Limitation Periods apply to your health insurance product, how long they last and how they affect any claims for benefits. It’s important to always read the member guide when buying new private health cover or switching to a different provider. When in doubt, ask as many questions as you need to so you have no doubts about the nitty-gritty details.
How do pre-existing conditions affect my private health cover?
‘Pre-existing condition’ is a legal term defined as any illness, ailment or condition that you had symptoms or signs of during the 6 months prior to joining a hospital policy (or upgrading to one at a higher level). Contrary to popular belief, it isn’t necessary that either you or your doctor knew about the condition beforehand or that it was diagnosed. You can still have a pre-existing condition without ever seeing a doctor about it before you’ve taken out hospital cover.
Having a pre-existing condition does not prevent you from purchasing the type of cover you wish, however. By law, health funds must let you buy cover at the same price as anyone else; you are then entitled to claim once you’ve served the required waiting period.
Your private health fund will appoint a doctor to determine whether your condition is pre-existing. Though they must take your own doctor’s opinions into consideration, they’re not bound in any way to agree with them. The final decision on whether you have a pre-existing condition rests with the health fund’s physician, who will make an assessment based on signs and symptoms. Risk factors such as family medical history should not play a part in this assessment.
If you believe the pre-existing condition determination made by your health fund is incorrect, you can ask them to officially review the decision. If you’re still unsatisfied after a further review, you can contact the Private Health Ombudsman. Their staff can look into the health insurer’s decision and provide an independent view.
The final decision on whether you have a pre-existing condition rests with the health fund’s physician, who will make an assessment based on signs and symptoms
What happens if you need hospital treatment during the initial 12-month waiting period?
Health issues have an annoying habit of cropping up at the most inconvenient times – including when your first-year insurance waiting periods are still in effect. So what happens then?
You should always contact your health fund as soon as you know you’ll need to be admitted to hospital. Although they can provide general advice about the pre-condition rule, they can’t tell you on the spot whether your medical condition is pre-existing or not. That comes later. What happens is that they send you a letter about the pre-existing rule as well as medical certificates that are to be completed by the doctors treating your condition. You’ll be requested to sign a consent form as well.
Once the consent form and medical certificates are completed, treating doctors can send them directly to your health fund. Once your health fund has the required documentation, they should (ideally) contact you within five days. If you haven’t heard from them by then, contact them to see if they’ve made a decision.
The important thing to remember is that if you go ahead with your hospital admission before your insurer has advised you if you’re entitled to benefits, you may become responsible for all admission costs if the decision goes against you.
In an urgent situation where you have to go to hospital immediately, there might not be sufficient pre-admission time for a health fund determination on whether your condition is pre-existing. In this case you won’t know before admission if any health fund benefits will be forthcoming, so you have the following options: (a) seek treatment in a public hospital as a public patient or (b) decide to go ahead and be treated as a private patient.
If you go the private route, the hospital will inform you of your out-of-pocket costs should your health fund decide you have a pre-existing condition that makes you ineligible for benefits. If you have to pay part or all of your treatment costs upon admission and your insurer later concludes you’re entitled to benefits, you’ll be able to recoup those costs from your health fund. If you’re still in the hospital and your health fund determines you’re not eligible for benefits, you can discuss your next steps with hospital personnel, including the option of being transferred to a public hospital for any further treatment.
Waiting periods and pregnancy
Health funds are strict about applying the 12-month waiting period for obstetric (pregnancy) hospital benefits. If you haven’t served the full waiting period or your baby comes early, you may not be covered for pregnancy services by your fund. The smart move is to plan well ahead: make sure you have private health cover organised for obstetric services long before you become pregnant. To obtain the benefits, a prospective mother must first serve the complete waiting period.
When you first sign up for your private health insurance, make sure you know exactly what’s covered in regard to obstetrics
When you first sign up for your private health insurance, make sure you know exactly what’s covered in regard to obstetrics. Some insurers may not cover pregnancy at all, while others may have restrictive benefits – for example, they might only cover pregnancy services if you’re admitted as a private patient in a public hospital.
If your goal is to be covered through a private health fund while having your baby in a private hospital, you’ll need to take out the appropriate level of hospital cover many months before you become pregnant. Forward planning is paramount. You’ll also want to look into boosting your insurance from single to family cover so your newborn’s health is covered at birth. Check with your insurer on when this needs to be done, as different insurers have different rules.
Two-month waiting periods
You’ll find there’s a standard two-month waiting period with most health funds before they will pay any hospital cover benefits. The exception to this rule occurs in case of accidents: some funds will pay hospital treatment benefits immediately if you suffer an accident during your initial two month waiting period. Not all funds do this, however, so check with yours for the specifics on this.
A two-month waiting period also applies to private health cover as a private patient in hospital for psychiatric treatment, palliative care or drug/alcohol rehabilitation. This is the case regardless of whether the condition is pre-existing.
What about waiting periods for extras cover?
Health funds differ so much in their waiting periods for extras cover that it’s impossible to generalise. It’s best to check with your individual insurer for their stipulations on (a) possible additional waiting periods for pre-existing conditions, (b) how and when benefits are provided, (c) annual limits on benefits and (d) what happens if you change to another fund.
Knowledge can save you money
It’s easier than ever to compare private health insurers these days, so do your homework. Check policy options so you get the cover that meets your needs – not just today, but in the future. Most insurers have handy online FAQs pages that can answer your questions.
Understanding private health insurance in Australia (including waiting periods) will help you make an informed choice when deciding on the right cover for your requirements.