Common Private Health Insurance Terms – Post July 1 2013
Health insurance can be tricky to understand. To make things a little easier we’ve put together explanations for some common terms you may not be familiar with.
Australian Government Rebate
The Australian Government Rebate is available to everyone who is eligible for a Medicare Card. It’s designed to help Australians cover the cost of their health insurance premiums. The rebate is income tested, which means the level of your rebate will depend on your annual income, age and the number of dependent children you have. Find out more about the Australian Government Rebate.
Lifetime Health Cover
Lifetime Health Cover (LHC) loading was introduced as a means to encourage people to take out hospital cover early in life and maintain it, otherwise you incur a penalty. If you take out hospital cover before 1 July following your 31st birthday, you would be penalised with lifetime health cover loading. The loading increases by 2% every year until you purchase cover and can increase to a maximum of 70%. Find out more about LHC.
Medicare Levy Surcharge
The Medicare Levy Surcharge (MLS) applies to income earners who earn over the MLS threshold and do not have an appropriate level of hospital cover. If you earn over $90,000 ($180,000 for couples, families and single parents) the surcharge is calculated at the rate of 1% of your taxable income. The MLS increases to 1.25% if you earn over $105,000 ($210,000 for couples, families and single parents) and 1.5% if you earn over $140,000 ($280,000 for couples, families and single parents).
Find out more about the MLS.
An excess is an amount you agree to pay if you’re admitted to hospital as a private patient. You may be required to pay an excess once (the first time you go to hospital) or every time you go to hospital. Your excess is based off the level you choose when you take out a policy. If you are unsure about how the excess works, call our health insurance partner iSelect on 13 19 20.
A co-payment is an amount you agree to pay for each day you spend in hospital. For example, if your policy has a $50 co-payment and you were in hospital for three days, you would have to pay $150 ($50 x 3 days). Depending on your policy this could be an uncapped amount, it is best to check the fine print. When you get a quote, download the policy brochure and check the co-payment details.
A pre-existing condition is an illness or health problem (signs/symptoms) that existed at anytime during the six months prior to you taking out or upgrading your hospital cover – regardless of whether or not you knew about the condition. In most cases, a doctor appointed by the health fund will determine whether a condition is ‘pre-existing’.
The Federal Government has a schedule of fees for medical services, called the Medicare Benefits Schedule (MBS). However, doctors can charge above this schedule. This is when the ‘gap’ occurs. In most cases your health fund has a gap agreement in place with your doctor to reduce or remove your out of pocket expenses.
Health funds negotiate agreements with doctors and hospitals to fully or partially cover the cost of treatment. It’s important that you contact your health fund before you receive hospital treatment to check whether the insurer has agreements with your hospital and whether your doctor is participating in the health fund’s gap cover agreement.
A waiting period is the amount of time you need to wait before you can claim for services from your health fund. You’re required to serve waiting periods when you’re taking out your first health insurance policy or when you’re upgrading your cover. When switching from fund to fund it is important to note any wait periods you have already served will come across, you may have additional wait periods for upgrades or new services depending on your insurer. Find out more about waiting periods