Health insurance

Health insurance: do you need it or don’t you? It’s a classic $64,000 question. If you need a hip replacement, non-urgent heart surgery, or a hysterectomy you might well wish you had insurance. If you don’t, you’ll be glad you didn’t spend the money.

Premiums also increase as you age and as new more costly treatments come into common use. When you need it most – once you’re retired – health insurance is at its most expensive.

If you get sick or suffer from a chronic condition, the public health system will help you sooner or later. It’s the “later” bit that makes health insurance worthwhile for some people. They want the peace of mind they can get treatment when they need it and not have to wait.

If you’re considering taking out health insurance, you need to ask yourself:

• Can you afford to put aside savings earmarked just for medical bills? If the answer is yes, then you’re most likely better off without health insurance, providing you don’t need to pay for major elective medical treatment when you’re younger.

• Can you afford to pay for doctors’ visits? Then it’s probably not worth paying higher premiums for comprehensive cover. Likewise, if you can afford the premiums for budget policies that only cover GP visits and other primary healthcare, such as prescriptions, then you can probably afford to pay for doctors’ visits yourself.

• If you don’t make it on to a public hospital waiting list, can you afford to pay for surgery? A procedure like a knee replacement can cost $24,000 to $29,700, according to Southern Cross. Can you afford to pay that? If a condition could stop you working, how much income could you lose?

• Are you willing to take some of the financial risk? Some companies offer cost-sharing policies that only pay a percentage of the claim. The idea is if you have some skin in the claim you won’t want to be treated unnecessarily or have the cost of treatment balloon out of control. The other way of doing this is by taking out a higher policy excess in exchange for a lower premium.

• What are your chances of needing major surgery? Diet and exercise are vital factors in maintaining health and in reducing the risk that you’ll need medical treatment. Making lifestyle changes may do more for your health than health insurance.

If you do want to take out health insurance, make sure you’re comparing apples with apples when looking at policies.

If you’re searching for a health insurance policy, here are some key questions:

• Are relatively common procedures or medical conditions excluded by the policy?
• Are treatment limits per procedure or per year?
• How generous is the policy about scans and investigative procedures?
• Can you claim if these procedures don’t result in hospital treatment?
• What type of minor surgery will be covered?
• Will non-Pharmac funded drugs be paid for?
• Is there home-based nursing available for post-operative care?
• Will you be able to claim for post-operative physiotherapy?
• Will the insurer allow you to go overseas for treatment?
• Are your children covered from birth – and until what age?
• Are pre-existing conditions covered after a stand-down period?
• Can you cost-share or is there a good trade-off between taking a higher excess for each claim and premium reduction?

We’ve answered some of these questions in our policy database.

Changing health insurers isn’t as easy as changing car insurance. Every time you apply, you must declare pre-existing health conditions.

If you don’t, even if it’s by mistake, you won’t be covered.

To avoid accidental non-disclosure, talk to your doctor about what conditions you should include in your application.

If you have low-risk medical conditions, your insurer may still provide cover, hike up your premium, or offer a stand-down period.

You might have a tougher time finding cover if you have a high-risk condition.

According to the Insurance and Financial Services Ombudsman (IFSO), insurers are entitled to limit their own risk.

If you’re thinking about switching providers, consider whether the benefits of the plan outweigh any limitations a new insurer will apply. Ask the provider lots of questions about what it will and won’t cover. An accidental exclusion could end up costing you dearly.

If you need urgent medical care for symptoms of Covid-19, you’ll be covered by the public hospital system.

But what if you’ve had Covid, and are thinking of applying for insurance? Does the virus count as a pre-existing condition?

Spokespeople for Accuro and Partners Life said the virus would be listed as a pre-existing condition but wouldn’t affect premium price or cover.

Southern Cross said if an applicant developed a condition as a result of getting Covid-19, it would consider the ailment as part of its normal application process.

Fully recovering from Covid, without complications, shouldn’t affect your AIA cover. Yet, “if a customer continues to experience symptoms, we may defer their application until after they’ve made a recovery”, a spokesperson said.

Unimed have no plan to increase premiums or consider the infection in the application process.

Partners Life said if you had complications from the infection, which meant it was more likely you would claim on your insurance, there may be additional terms around your cover.

Partners Life also noted that some companies overseas have started to include Covid-19 vaccination status in their policy considerations. Especially if applicants have pre-existing conditions that could lead to complications.

“It is therefore likely that in the near future vaccination status for new applicants with pre-existing conditions, could result in different underwriting terms”, the spokesperson said.

This could mean exclusions for some treatments or more expensive premiums.

At this stage, none of the insurers we spoke to plan to include it as a term of insurance.

We’ll keep an eye on it.

See your regular doctor first

If you need advice ask your GP, not Doctor Google. Anyone can advertise themselves as a “specialist” online. Unless they’re a Medical Council-registered doctor, the appointment will be a waste of your time and money.

Check whether you must see insurer’s affiliated health provider

Some insurers, such as Southern Cross and Nib, have a list of clinics you need to visit if you want full coverage.

Ask for an estimate and apply for pre-approval

There’s nothing worse than a claim that’s unexpectedly refused, so play it safe by using your insurer’s pre-approval process. Keep in mind insurers will only pay “reasonable or customary” costs – ask the insurer if there’s a dollar limit for the type of consultation or procedure you have planned.

Re-read the policy terms

It’s a good idea to review the fine print to check what is and isn’t covered (for example, follow-up appointments).

Here’s the most common claims and the procedures resulting in the insurer’s biggest bills each year:

Most common procedures

1. Skin lesion destruction: $282 to $2226
2. Skin surgery: $17 to $150
3. Minor surgery at a GPs: $14 to $450
   
4. Colonoscopy: $1500 to $3200
5. Eye injections: $604 to $1050
   

Highest yearly expenditure

The top five procedures by total cost:

1. Knee replacement: $24,000 to $29,700
2. Hip replacement: $23,100 to $27,770
3. Colonoscopy: $1500 to $3200
4. Skin surgery: $200 to $2400
5. Spinal fusion: $28,000 to $87,000
   

Premium health insurance offers benefits such as extra travel and accommodation expenses or funeral costs. But these expenses aren’t as frequently claimed as surgical procedures, diagnostic tests or consultations – so weigh up if you’re better off squirrelling this extra money away for a rainy day.

Health insurance companies must belong to a financial dispute resolution scheme. All the companies in our survey are members of the Insurance and Financial Services Ombudsman scheme.

If you have a dispute you can’t resolve with your insurer, you can take the case to the ombudsman. However, the complaint must be “deadlocked” with the company before you can file a complaint.

The scheme can look at complaints about:

• declined claims
  
• policy and contract interpretations
• financial advice or services provided by the insurer
• the payout offered.

The ombudsman can’t look at complaints about premiums, excesses, underwriting decisions or claims above $200,000 (or $1500 per week), unless the insurer agrees.