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New health fund tiers: what do they mean for you?

Private health insurance is a significant investment for most Australians, with 55% of us covered by some policy. Often, insurance products are complex and difficult to understand and compare.

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You might have recently heard from your health fund regarding new policy changes that will commence this year. In an attempt to simplify health insurance, the government has introduced a new tier system, in the hope that it will ensure consumers know what they’re covered for, when they buy a particular policy. It’s hoped that these new changes will provide more clarity for consumers – and less unpleasant surprises when it comes to claiming for procedures. This may also impact your coverage for certain Medicare item numbers.

The private health insurance reforms will bring in a new system for categorising hospital products, breaking policy cover up into gold, silver, bronze or basic cover.

All hospital-based treatments have been organised into 38 categories, based around different body systems, for example: ‘ear, nose and throat’ or ‘bone, joint and muscle’.

Each new hospital policy will fall under one of four product tiers: gold, silver, bronze or basic. Each product tier will cover a specific number of categories in a private hospital:

  • EBasic – very little if any cover in private hospital
  • EBronze – low cover (18 categories of services)
  • ESilver – medium cover (26 categories of services)
  • EGold – full or top cover (all 38 categories of services)

Policies that cover more than the minimum requirement will be called a ‘plus’ policy, for example ‘bronze plus’ would cover some additional benefits, above a standard bronze policy.

Also, member will now be able to choose to pay a higher excess to reduce their premiums. This means they might choose a policy that costs less throughout the year, but will incur a larger excess payment if they do go to hospital.

When will the changes happen?

The changes will start to happen from 1 April 2019. By 1 April 2020, every private health insurance policy will have changed to the new system. Your insurance policy may not change straight away, but if you are planning surgery, we recommend that you call your fund to discuss their changeover date.

I’m planning surgery; should I change my policy before the 1st of April?

Choice recommends that – unless your fund has advised that you will lose cover for an essential item – you don’t need to switch funds or policies before 1 April. They recommend waiting until your fund advises the switch over date, and whether or not they’ll close old policies and move members to a new one. Also, Choice advises that it could be difficult to find the right policy before April 1 as many policies are changing, and will be released after that date.

Finding the right policy to switch to before 1 April might be difficult, because many policies are changing and new ones will be released on that date. If you haven’t already, you’ll receive a letter from your health fund telling you what they’re going to do with your policy; read this handy guide to help you understand the letter from your fund.

If you’re planning surgery, ask your surgeon if item numbers apply. If so, contact your fund and ask whether the item numbers specific to your surgery will be covered in the tier that your policy will be on. If not, ask them if you can select a higher tier – and whether they’ll waive any waiting periods.

Is this a good thing, or a bad thing?

Like all private health insurance policy changes, only time will tell! The government believes the new tiers will make it easier for patients to understand what each policy type covers, and to shop around for the best private health insurance deals. Conversely, there are concerns that consumers will have difficulty understanding the new categories, and ensuring continuity of cover.

We welcome any private health insurance reforms that deliver clearer, fairer and more cost effective options for patients.

While we are not permitted to recommend any specific funds to our patients, our practice manager Carol is able assist you with questions to ask your fund to ensure you are covered for any item number eligible procedures you may be considering in the future. Email Carol any questions at