Finding health insurance: How to flourish physically and mentally

Last week as I sat eating my brekkie and reading the paper in the zombie like trance of one who has to get up at 5:45am for work, an article caught my attention enough to kick-start the arduous process of waking up.

It read: ‘HBF caves to lower health Insurance rise’.

Now, I understand that most people would skip straight past this (except for a few HBF members who will give a little fist pump), but it is that time of the year where health funds will start throwing freebies at you to encourage you to sign up, Oleg the meerkat will suddenly be all over your TV and articles like this will start invading the papers… which means now is the perfect opportunity to discuss health insurance!

Not exciting enough for you? How about if I told you now is the time you could save a stack of cash (sounds a lot more enticing doesn’t it?)

Take the above article for example. To the naked eye seems fantastic that HBF have become the first major health fund to publicly reduce its planned premium rise and pass these savings on to their members, but I have recently spent hours scouring the internet to take out my own policy and found there are HEAPS of options out there, and judging anything on face value alone could leave you significantly out of pocket.

Part 1: the basics

With the March 31st private health insurance rebate deadline looming (where you need to have your insurance sorted in order to receive the government rebate), and the coinciding price hike of private health insurance on 1 April, now is the time to start exploring your options.

Fortunately with more and more health funds and policies being launched (there are now 207 extras policies for an adult in WA!) and companies like iSelect and Compare the Meerkat Market making it simple to check out similar policies to find the one that best suits you, it is definitely a buyers’ market.

Before getting into the policies themselves we need to go through a bit of basic economics theory (hang in there for this bit!).

Most people know of the inflation rate and understand that the cost of everything goes up a little bit each year and wages are generally increased by a similar amount to ensure everyone can keep paying their bills.

Over the last 10 years the inflation rate has averaged 2.5% rise per year (give or take a couple of decimal points), although we’ve slowed down a little recently to hover around 1.5%.

As well as the overarching inflation rate, there is also a Health Care Inflation Rate (HCIR) which relates to the increase in everything health related.

This generally sits around the 5-5.5% mark which fair bit higher than most industries.

The cost of a health insurance policies increased last year by an average of 6.18% (32.06% since 2011) which is similar to the HCIR and understandable given that the price of everything they are paying out on is increasing.

However, many health funds are charging you more for your cover but not changing the rebate amount, this is despite the cost of treatments (physio, optical, dental etc.) increasing each year, which will be leaving you with a bigger gap per session and more money out of pocket.

Thankfully there is now a lot of transparency regarding what each fund is offering in terms of rebates and costs but it does take a little bit of digging.

The easiest way to check out what policy will fit your needs and budget is by contacting a market comparison company like those mentioned above.

It is worth keeping in mind that they often only display policies from companies they are getting paid to feature so you might not be getting the full picture.

Now, if you’re happy running the risk of getting a sub-standard policy but want to take the quick and easy route, just check out a market comparison website and read no further.

However if you have a few spare minutes and want the best bang for your buck, carry on reading and we’ll go a little deeper into the rabbit hole of private health insurance…

Part 2: the funds

There are a few ways to go about picking your policy; you can either go based the performance of the health fund, the price, the amount of rebate provided, whether they bundle in house and car insurance or even the gimmicks the health funds will offer, like the free GoPro HBF were offering last year for each new member (I would hope by this point you won’t be swayed by the freebies alone!).

There are currently 34 health funds listed with the government, 23 of which are available to the general public and 11 restricted funds (teacher’s health, defence health etc).

For each of them the health department has kindly put together a ‘report card’, just like the ones you got in school!

The report card goes through the percentage of hospital and extras cover they pay out in each state, the fund’s yearly profit, member retention, complaints received and the proportion of these complaints they looked into.

Next to each figure is the industry average so you can see exactly how they shape up in each area.

Let’s check out BUPA, a nation-wide health fund with a 26.7% share of the market and quickly gaining popularity in WA.

You can check out the report cards of all the health funds here.

As well as their overall performance, it would be worth inquiring at your physio, dentist or whoever else you receive treatment from to see who their preferred provider is.

For example, the physios at our practice are BUPA preferred providers so if our patients are with BUPA they get more money back after each session than they would elsewhere.

The total amount BUPA covers in a year doesn’t change though so if you are receiving a lot of treatment you will run out sooner.

Part 3: the policies

Each health fund will offer a number of different policies which cover various things at various costs.

Basically, the more money you pay, the more services it will cover and the more money you’ll get back from each treatment.

A quick comparison of available policies on iSelect for a 40 year old has basic extras cover alone starting at $10 a month, hospital from $45 and both for $55. For the top of the range cover you can pay $200 a month which will get you over $7000 worth of rebates each year.

If you’ve got a couple of preferences on which health fund you’d prefer to go with, go directly to their site so you can find the policy which will suit your budget and give you the rebates in the areas you use most.

If you’ve got this far and haven’t decided which fund to go with, check out the Health Department website which will allow you to put in your preferences and display all the relevant policies (warning: there are a lot of options!).

Have a look at a few within your budget and compare the rebate you’ll get from the services you use the most, the waiting periods and value for money.

Once you’ve got a couple in mind, check out the health fund report cards, weigh up those results with the individual policies to decide which will give you the most value and be the most reliable and VOILA, you’ve got the policy that’s best for you!

If it’s all just looking too hard and you can’t make up your mind, check out iSelect, Compare the Market, Canstar, Budget Direct, Choice or any other comparison websites and they’ll lay out a few policies in a more user friendly manner but you won’t necessarily be getting the best deal.

Part 4: summary

If you’ve made it this far, CONGRATULATIONS!

You are now an expert on private health insurance and will hopefully save yourself a few dollars when choosing your next policy!

If you already have one, it could be worth having a look around every now and then because the market is constantly changing with new products being released, price hikes differing between funds and your health needs changing.

The whole process is a bit time consuming but for any insurance it’s worth dedicating a few hours to exploring your options because it’s something you don’t need to do very often and it could save you a lot of money in the long run.

If you have any questions on health insurance or anything physio related, feel free to call the clinic on 9438 3444 to have a chat to one of your very friendly and knowledgeable physios!

February 29, 2016

*This blog was written in 2016 and data is liable to change*

References and resources