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Tips when reviewing your health cover

Tips when reviewing your health cover

Tips when reviewing your health cover

Tips when reviewing your health cover
Author Ysabel Tang
Date 2 Mar, 2018
Time to read 7 minutes

While most people think of ‘health insurance’ as one product that covers everything, it’s really an umbrella term. There are many different components you can chop and change to suit your needs.

Understanding how each of them works is the key to finding potential ways to save.

Hospital insurance

Hospital insurance helps cover your costs for treatment in a private hospital. You can also use it to cover treatment in a public hospital.

You may be wondering, why would I use my private cover in a public hospital when it’s covered by Medicare? And why would I go to a public hospital when I have private health insurance? And why would I need private health insurance when the public system is free?

These are all great questions, and you can read all about them here. For now, we’ll focus on ways to reduce your Hospital insurance premiums.

Ways to save

The first thing you can do is review your level of cover. HBF’s most comprehensive (and most expensive) Hospital insurance is ‘Top Hospital’. It covers you for all procedures and services covered under the Medicare Benefits Schedule.

To save money, you can choose (or switch to) a lower level product.

Lower level products exclude or restrict cover for a small number of more expensive services like maternity, heart treatment or cataracts, making them a bit cheaper.

The good news is you get the same amount back when you claim regardless of which hospital product you’re on*, the only thing that changes are the procedures you can claim on.

The challenge is you don’t always know what services you might need in future. For example, switching to a product that excludes maternity may also mean inadvertently dropping cover for heart treatment. So be careful you don’t accidentally drop cover for something you might really need.

If dropping services is not an option, another way to save is to add or increase your excess.

Hospital insurance excess is just like an excess for your car or home insurance—it’s something you pay upfront out of your own pocket when you go to the hospital.

By adding an excess to your Hospital insurance, you’ll bring down the price. If you already have an excess, consider increasing it to lower your premium.

* Provided you don’t have restrictions on your policy.

What happens if you cancel?

If you’re young, healthy, and have no history of genetic illness in the family, you could consider dropping your Hospital insurance for a while and only keeping your Extras insurance. However, this is not without its risks…

Firstly, not having private hospital cover means if something goes wrong, you will have to rely on the public system or fork out $1000s to access treatment in the private system. If you try to take out Hospital insurance again later, you will have to re-serve any waiting periods, which includes a 12-month waiting period for pre-existing conditions.

Secondly, if your income is more than $90,000 (or $180,000 per household), dropping Hospital insurance means you could be hit with the Medicare Levy Surcharge (MLS)—an extra tax the Government imposes on higher income earners who don’t have Hospital insurance.

Lastly, if you’re over 31 and you drop your Hospital insurance, you may be subject to Lifetime Health Cover loading if you decide to take it back out again in future. The LHC loading basically means that if you try to get Hospital insurance again when you’re older, you will pay more for it than everybody else—2% more for every year over age 30 that you didn’t have cover.

Extras insurance

Extras insurance covers you for treatments outside of the hospital—things like dental, optical and chiro. These are services Medicare generally doesn’t cover, so without Extras insurance, you’d pay the full cost out of your own pocket.

Ways to save

Extras insurance works differently to Hospital insurance, in that changing your level of cover impacts both the services you’re covered for as well as how much you’ll get back.

Generally, you can save money on Extras insurance by choosing a product with:

  1. Lower benefits (the amount of money you get back when you claim);

  2. Lower annual limits (the amount you claim up to over the course of a calendar year);

  3. And/or fewer services.

You can compare different levels of Extras cover here.

While it sounds counterintuitive, you could also get more value for money by increasing your benefits, annual limits and the number of services covered. That’s because most extras services generally involve an out-of-pocket cost. By increasing your level of cover, your insurer will pay more of the service cost, reducing the amount you pay out of your own pocket.

What happens if you cancel?

To quickly and significantly lower your health insurance premium, you could cancel your Extras insurance and just keep Hospital insurance.

The Government has no penalties for not having Extras insurance. (So you won’t have to pay the MLS for not having it, or be subject to the LHC if you take it up again later). The only kicker is you’ll have to pay 100% of the cost for things like optical and physio because Medicare generally doesn’t pay anything towards those kinds of services.

You will also have to re-serve wait periods if you choose to take Extras insurance out again in the future though (usually anywhere from 2 to 12 months depending on the service).

Ambulance insurance

As the name suggests, Ambulance insurance helps cover the cost of ambulance transport.

In most states (except for Queensland and Tasmania), Medicare doesn’t cover the cost of emergency transport and other ambulance services. That means you could pay up to $1000 out of your own pocket if you need an ambulance.

With HBF, there are two types of ambulance insurance: Urgent Ambulance and Ambulance Plus.

Urgent Ambulance insurance covers the cost of emergency or urgent ambulance transport by road. It also covers any situation where you’re transported to the emergency department. It’s the state Ambulance provider (e.g. St. John Ambulance) that figures out whether your situation requires an Urgent Ambulance—not you.

Even if your situation doesn’t require an Urgent Ambulance, a non-urgent ambulance may still arrive at the scene; if this happens, you will have to pay the call-out fee.

‘Non-urgent’ ambulance call-outs aren’t very common. But it can happen—and that’s where HBF’s Ambulance Plus insurance comes in. It’s an add-on that covers you in non-urgent situations, including call-outs.

This is useful because in highly stressful and potentially life-threatening situations, you don’t want to be second-guessing yourself worrying that you’ll be charged a massive call out fee if it turns out to be a false alarm.

Ambulance Plus also covers the cost of ambulance transfers by road. These transfers happen in ambulances without sirens and often involve trips from one hospital to another, or from the hospital to your home.

Ways to save

Most HBF Hospital and Extras products automatically include cover for Urgent Ambulance. However, if you only want cover for an ambulance in an emergency situation, you can take out Urgent Ambulance insurance separately, without needing to have Hospital or Extras insurance.

Because Ambulance Plus (the non-urgent one) is an add-on, you can remove it to help reduce your premium. However, from just $0.55/week, it would be a low reduction for something that could save you a lot of money in the future.


GapSaver is a unique HBF add-on that lets you put aside money now, so you can use it later to cover your gaps.

How does it work? Basically, you pay a little more on top of your premium and that extra money goes into your GapSaver account. You can then dip into this account to help cover your out-of-pockets for Hospital or Extras services.

You can also get the Australian Government Rebate on Private Health Insurance for any GapSaver contributions.

Ways to save

If you currently have GapSaver, you can reduce your premiums by lowering your GapSaver level (there’s a bunch to choose from) or by removing GapSaver altogether.

If you remove it, the money you have accumulated so far will still be available for you to use, so long as you maintain your HBF membership.

Then you can always add it on again later when you’re ready.

And the savings don’t stop here. By reviewing your policy every year, you’ll be able to pinpoint the things you don’t need and add anything you do, adapting your health cover to suit both your budget and your changing needs.

Related Articles

Why Do Health Insurance Premiums Go Up?
Why do health insurers keep increasing their prices, and how can they justify another increase that’s more than double the rate of inflation?

Read more

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