Commissioner's Blog: Beware of pressure to buy health insurance

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Consumers can be forgiven if they feel overwhelmed or confused by the myriad of insurance options currently being advertised.

At the end of every financial year health insurance providers’ start talking about tax, surcharges and rebates but don’t let this rush you into a poor decision.

Health insurance is a complex area and your needs may change with time so when   you are looking to take out or review your health insurance policy there are a number of consumer tips that can help you with your decision.

The first is when you compare policies you need to read more than the label. A recent review highlighted if you just compare “top” cover between insurers what is actually included in that cover can vary greatly. Top hospital cover on one policy may be comparable to a lower level of hospital cover with another insurer.

We recommend you compare policies in detail and think carefully about your needs before shopping for policies based on price alone. Some cheaper policies may not be value for money in the long run as they may have a number of important exclusions.

The results from comparator websites can also be ambiguous as they do not always make it clear that they don’t compare the entire market when they return the “best” price. 

The government website is a great place to start a full review of your health insurance.

This website is set up under legislation and every insurer is required to provide up-to-date information about what is covered by each policy and its prices.

The site has a comparison feature you can use for health insurance policies from all the private health insurers and also offers advice on managing your policy including leaving or switching companies.

Another key point is that if you wish to switch to another insurance company’s policy, which is the same or lower level benefit, you will not have to serve another waiting period.

However, if your new policy covers new or higher benefits which were not covered in your previous one, then you will need to serve those waiting periods, unless otherwise negotiated with your new fund provider. 

Any claims you have already been paid by your previous fund may be taken into account in your annual benefit limits.

Remember you are not obliged to stay with your current insurance company. 

A health fund cannot refuse to insure you or refuse to sell you any policy you want to buy on the basis of your health or how likely you are to claim. You can always consider switching insurers to obtain a better deal and you won’t be charged exit or set up fees to do so. 

In Australia, having private health insurance is not compulsory but your decision may have financial implications that can affect your tax status.

Health insurance advertising may stress buying private health insurance can help you with your tax, but this may not always be the case.

In fact, some claims can be potentially deceptive.  Check with the Australian Tax Office before you make a purchase based on any potential rebates, surcharges or tax incentives.

So while the end of the financial year is a great time to check to see if the cover and inclusions still suit your current lifestyle, you should not feel rushed into making a decision.

If you have concerns or complaint about your health insurance contact the Private Health Insurance Ombudsman (PHIO)

For any general consumer advice you can email or call 1300 30 40 54 during office hours.

Consumer Protection
Department News
27 Jun 2016

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