Private health insurance had a much-needed overhaul back in 2019 that introduced structured health insurance rebate tiers.
With confusion growing over what health insurance policies did and didn’t cover, the aim of the new health insurance rebate tiers system is to greatly simplify the process. Making purchasing the right level of health cover for your circumstances and your budget easier.
Policies are packaged into Basic, Bronze, Silver and Gold tiers, with each private health insurance rebate tier containing a set list of inclusions. Insurers can include additional treatments on top of the required minimums in lower tiers. The new structure is a very welcome improvement and should simplify the process for consumers.
Let’s explore the four private health insurance rebate tiers
The Basic Tier
The Basic tier is pretty uninspiring and really only any good for those wanting to avoid the Medicare Levy Surcharge. In this tier only three treatments are covered on a restricted basis meaning that you should expect additional expenses should you require any of them.
The 3 treatments in the Basic tier are:
- Rehabilitation (restricted cover)
- Hospital psychiatric services (restricted cover)
- Palliative care (restricted cover)
The Bronze Tier
The Bronze tier is big improvement on Basic. Meaning it provides a reasonably good budget option with particular benefit for women as well as young people.
Women
The benefits of the Bronze tier cover for women are that it covers breast and ovarian cancer treatment, breast reconstruction and gynaecological services.
However it’s important to note that the Bronze health insurance tier does not cover pregnancy or IVF. Therefore, it is not suitable for women ready to start a family or considering having more children.
Young people
In comparison to the Basic tier, the Bronze health insurance tier is a great starter policy for young people between the ages of 18 and 25 years. Particularly because it covers common treatments such as ear, nose and throat treatments, tonsils, adenoids, grommets as well as pain management.
In addition, there is also the bonus of insurers offering young people a 2% discount up to 10% for every year under 30 they are, which continues until they turn 31.
The bronze tier covers the 18 treatments below as well as everything in the Basic health insurance tier (on a restricted basis).
- Everything in the Basic tier (restricted cover)
- Bone, joint and muscle
- Brain and nervous system
- Breast surgery (medically necessary)
- Chemotherapy, radiotherapy and immunotherapy for cancer
- Diabetes management (excluding insulin pumps)
- Digestive system
- Ear, nose and throat
- Eye (not cataracts)
- Gastrointestinal endoscopy
- Gynaecology
- Hernia and appendix
- Joint reconstructions
- Kidney and bladder
- Male reproductive system
- Miscarriage and termination of pregnancy
- Pain management
- Skin
- Tonsils, adenoids and grommets
Silver tier
The next step up, Silver, provides quite a comprehensive list of inclusions and is a good option for older people and those not planning on having children.
As well as covering everything in the Basic tier and everything in the Bronze tier, the Silver tier also includes treatments more associated with getting older. For example, hearing devices as well as podiatric, back, neck, spine and heart surgery are included.
Also, for those who do not plan to have children, the silver health insurance tier offers a very good level of cover without the added expense of pregnancy, birth or reproductive procedures.
Treatments covered in the Silver tier are:
- Everything in the Basic tier (restricted cover)
- Everything in the Bronze tier
- Heart, lung and vascular system
- Blood
- Back, neck and spine
- Plastic and reconstructive surgery (medically necessary)
- Dental surgery
- Podiatric surgery (provided by an accredited podiatric surgeon)
- Implantation of hearing devices
Gold tier
Lastly, the highest tier offers a significant level of cover that is particularly suited to people starting a family. Particularly as it includes pregnancy, birth and reproductive services. Additionally, older Australians benefit from the inclusion of cataracts and joint replacements, as well as chronic conditions such as diabetes, kidney failure and obesity.
Furthermore, the Gold health insurance tier is also the only level that includes unrestricted cover for rehabilitation, hospital psychiatric services and palliative care.
The Gold health insurance tier includes:
- Full cover for everything in the Basic tier
- Everything in the Bronze tier
- Everything in the Silver tier
- Cataracts
- Joint replacement and spinal fusion
- Dialysis for kidney disease
- Pregnancy, birth and neonates
- Assisted reproductive services
- Weight loss surgery
- Insulin pumps
- Chronic pain
- Sleep studies
While considering purchasing a gold policy bear in mind there is a 12 month waiting period for most items. So if you are planning a family you better be prepared to wait a while before you get started!
Should couples always buy a couples health insurance policy?
Not necessarily. Instead couples should consider what each tier covers before assuming that a couples policy will be cheaper. In fact a lower level tier may be better for one of you and as such, save you more than a joint policy at the higher tier would. For instance: Gold includes pregnancy and birth services which come at a premium and also includes treatments more associated with getting older. So Silver may well be a better option for a male partner at that time.
Higher excess level granted
One final positive to mention: after 20 years, the government has allowed an increase in the amount a consumer can choose to pay as an excess. Paying a higher excess means a lower premium on policies; the reason why 80% of Australians choose this option. The permitted excess amount has risen from $500 to $750 for a single person and from $1000 to $1500 for a couple/family. The change will contribute to keeping premiums lower and give consumers more choice.
Not all change is good
As with every reform it’s not good news for everyone. In this case, those preferring the natural path miss out. The following natural therapies were excluded from the ‘general treatment’ definition on private health insurance:
- Alexander technique
- Aromatherapy
- Bowen therapy
- Buteyko
- Feldenkrais
- Western herbalism
- Homeopathy
- Iridology
- Kinesiology
- Naturopathy
- Pilates
- Reflexology
- Rolfing
- Shiatsu
- Tai chi
- Yoga
A review by the National Health and Medical Research Council concluded that there was no evidence to show that these therapies had the ability to produce the intended results. The intention for the exclusion of the 17 therapies is to reduce premiums by only channeling funds towards channel funds to therapies that demonstrate clinical effectiveness.
In light of these changes, it will be interesting to see how insurers manipulate these changes over the coming few years, however, the health insurance tier system is a huge improvement, along with the broader story of the health insurance reform.
Please note: The information in the above blog post is general in nature and should not be relied upon as detailed advice that applies to everyone. Consult a qualified advisor for detailed financial planning and insurance advice.
