I’ve had basic private health insurance on-and-off for a couple of years and never really took much notice of the premiums and type of policies. As we’re planning to start a family in the near future, I wanted to upgrade my cover to include maternity cover so took the time to compare different policies and funds.
I found this process confusing, difficult and very time-consuming. I researched more than 20 funds and called companies directly for more information. A few calls were sales-driven; one salesperson was very pushy and gave me some information that I found to be incorrect after some research I did after our conversation. Some funds lacked detailed product information and information was often too broad (or non-existent) for me to clearly understand what would be covered or not. I’ve heard that maternity out-of-pocket expenses in a private hospital costs anywhere between a few hundred dollars to $10,000, and that’s on top of the monthly premiums!
Maternity cover is usually the top (more expensive) level of cover. I’ve found that compared to singles basic cover, maternity cover is about $100 per month more expensive.
If you’re planning to start a family and are looking to take out private health insurance, make sure you consider the following questions.
1. Do you really need extras cover?
Extras cover usually includes services from a health professional (e.g. optometrist, physiotherapist, dentist). Since we only regularly see a dentist, we calculated that the cost of paying for them ourselves is less than the additional cost of extras in health insurance premiums.
2. Is singles cover cheaper than couples cover?
If you don’t have children yet, it’s probably cheaper for you and your partner to have separate singles cover. One of the funds I spoke to actually recommended this. My husband is healthy and has never claimed any extras benefits so decided to take out basic singles, hospital-only cover which costs less than $80 per month. I signed up to a singles, hospital-only plus pregnancy cover and pay $180 per month. A couples cover would’ve been over $300 per month for us.
3. What is the waiting period for pregnancy or IVF-related cover?
I found a ‘12-month waiting period’ for childbirth and IVF to be standard across health funds. It means that if you haven’t held private health insurance before, or if you’re changing or upgrading from a lower-level cover, you won’t be able to claim for pregnancy or IVF-related services until after 12 months. So, if you want to give birth in a private hospital and claim this through private health insurance, try not to get pregnant for at least 4 months after signing up to a policy. You won’t be covered if you have a premature birth within the waiting period, even if you give birth only a few days before you’re served the waiting period.
If you already have an existing policy with the same level of cover, you can transfer to another fund without having to re-serve any waiting periods. Your existing fund will need to provide a Transfer or Clearance Certificate to your new fund. This generally applies to all policies and health funds, it’s not specific to pregnancy-related waiting periods.
4. Will your newborn be automatically covered under your policy?
This is an area that I still find unclear so make sure you specifically ask about this when you’re comparing policies. If your newborn baby is healthy and doesn’t have any health issues then they aren’t admitted to hospital as a patient (they are classified as your ‘boarder’). My understanding is that this means that services they receive in hospital, such as a general check-up by a paediatrician, won’t be covered under your policy.
If your newborn experiences health issues at birth then they would be admitted into hospital for further treatment and will be covered under your policy, so long as you upgrade to a SIngle Parent or Family policy. Upgrading your policy so your newborn is included usually needs to be done within 2-3 months of your baby’s date of birth.
5. Is the quoted premium based on the full rebate?
The Australian Government has a private health insurance rebate to help people cover the cost of premiums. The amount of your rebate will depend on your yearly income. The rebates and income tiers may change every year. The Private Health government website has a table of tiers and rebate percentages.
For individuals or families under 65 years old, the government rebate ranges from about 8 – 25%. Individuals or families who earn a high income (e.g. individuals earning more than $140,000 salary in 2018 and families earning more than $280,000 in 2018) receive no rebate.
Funds usually quote a premium based on the highest rebate which are for lower-income individuals and families. If you don’t qualify for the highest rebate (you’re in either Tier 1 or Tier 2), your premium may be higher than quoted. Make sure you ask for a quote based on your salary/Tier so you can fairly compare prices of different policies.
6. Will I need to pay out-of-pocket costs during my pregnancy or childbirth?
I had a few funds say that EVERYTHING is covered which I found to be inaccurate. Private health insurance won’t cover costs outside of hospital, such as antenatal appointments with an obstetrician, private ultrasounds or blood tests. On average, you’ll have around 12-15 appointments with an obstetrician during your pregnancy, so these out-of-pocket expenses can be expensive.
Obstetricians are required to inform you of their consultation fees upfront. They’ll give you an Informed Financial Consent document to sign which sets out their fees. Your out-of-pocket expenses may be reduced if your obstetrician charges a No Gap or Access Gap or you may be able to claim a small rebate from Medicare.
For your birth in a private hospital, you may also not be covered for:
- Expensive medications
- Anaesthetist fees
- Assistant surgeon fees
- Paediatrician fees.
7. Is your local private hospital affiliated with the health fund?
You will be covered if you use a private hospital that is affiliated with your health fund. Each fund’s hospital network is quite extensive. If you live in a metropolitan area then it’s likely that your local private hospital will be affiliated with many health funds.
If you live in a regional area then you may need to ask round different funds. Most of this information is available on a directory on the fund’s website.
Changes to hospital policies in 2019
In 2019, the Australian government introduced reforms to private health insurance which will affect all hospital policies.