Health insurance

Health insurance: do you need it, or don’t you? With health insurance policies costing up to $293 a month for a 55-year-old male, it’s an important question. If you need a hip replacement, non-urgent heart surgery, or a hysterectomy you may 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 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. The “later” bit 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, ask yourself the following questions.

• Can you afford to put aside savings earmarked just for medical bills? If the answer is yes, 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 doctor’s appointments? 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 doctor’s appointments yourself.

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

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

• Does the policy exclude relatively common procedures or medical conditions?
• Are treatment limits per procedure or 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 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.

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 the 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

Having your insurance provider refuse your claim unexpectedly can be a nasty surprise, 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).

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.