Health Insurance – policies, benefits & lifetime health cover

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There are two types of private health insurance: hospital policies that cover you when you go to hospital, while general treatment policies (sometimes known as ancillary or extras) cover you for ancillary treatment (eg dental, physiotherapy). Most health funds offer combined policies for hospital and general treatment benefits.

Importantly, if you’re purchasing cover for the first time or upgrading your plan, you may need to serve a waiting period before you can claim benefits. Depending on your level of cover, you may not be fully covered against all costs associated with your treatment and have to pay some out-of-pocket expenses.

Hospital Cover. Hospital policies help cover the cost of in-hospital treatment by your doctor and hospital costs such as accommodation and theatre fees. Generally, any medical services listed under the Medicare Benefits Schedule (MBS) can be covered on some form of private hospital insurance. Some services not listed on the MBS are only covered by private hospital insurance to a limited extent.

Funds generally offer several different policies across these categories, combined with different levels of excess or co-payments.

An excess is an amount that you agree to pay towards the cost of hospital treatment, in exchange for lower premiums.

General Treatment Policies provide benefits for ancillary services such as physiotherapy, dental and optical treatment. Most health funds package policies to provide cover for both hospital and general treatment services.

Lifetime Health Cover (LHC) is designed to encourage people to take out hospital insurance earlier in life and to maintain their cover.

In most cases, your LHC base day is the later of 1 July 2000 or 1 July following your 31st birthday. For example, if you take out hospital cover at age 40 you will pay 20% more than someone who first took out hospital cover at age 30. The maximum loading is 70 per cent.

Once you have paid a LHC loading for 10 continuous years, the loading is removed.

For more about LHC go to: www.privatehealth.gov.au/

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