Switching Health Insurance

Switching health insurance is easy if you can compare health insurers online in one place.

Do your premiums keep going up? Are you disappointed with the way your insurer treats you? Or have there been a change of needs? Whatever it is, you’re on this page because you’re considering changing policies to a new one in the hopes of maintaining the good reputation and benefits you’ve built over time.

Lucky for you, changing policies is pretty simple. Here’s what you need to know:

Don't switch until you've read these health insurance tips

Figure out your current needs. Maybe its been a while since you’ve looked at your cover, or you want to transition out of your parents’ policy to your own one. Its quite common for people to be paying more than they need for a higher level of cover that doesn’t exactly match up with their needs.

A combined policy isn’t always the best option. There’s a common misconception that a combined policy will be a more affordable option seeing as it mixes both hospital and extras cover – this isn’t true. If you take the time to compare separate hospital and extras policies from different brands, you’d sometimes find that it’s more cost-effective to sign up for two separate hospital and extras policies, than signing up for a combined policy.

Stop worrying about the waiting periods. If you’re concerned that you’ll have to serve your 2-12 month waiting periods again, don’t stress. When you switch to a new policy, waiting periods you’ve already served carry over into the new policy you’re signing up for (barring the benefit is the same in the new policy as it was in the previous e.g. dental benefit waiting periods will carry over to the new policy for the same dental benefits).

Get the best value out of your extras. You can easily make your money back from the amount you save by choosing the best extras policy for your current situation. Besides, if all your extras have been used up, changing and starting those benefits over again on a new policy could be very beneficial.

Throw caution to the wind if you’re considering a couples policy. Make sure you’re not paying more than you need to if you’re on a shared health policy e.g. paying for a high level of cover for pregnancy that covers the both of you but isn’t necessary for the father. In this case it would make more sense to have two individual policies, a higher level of cover for the one who is pregnant and a level of cover that meets the needs (whether higher or lower) of the other parent.

Understand what turning 31 will entail. It’s common belief that when you turn 31, your taxes go up – this isn’t true. The Lifetime Health Cover Loading (LHC) is what’s responsible for those increases. The LHC is an additional amount you’d have to pay for every year you don’t have health insurance after turning 31 once you sign up for private health insurance. This has no effects on changing your policy.

New policies aren’t always the better than the old. For policies that have been around longer than 10 years or more, don’t be surprised if your policy is more affordable than any of the new policies. We recommend sticking with that policy unless of course you need to add someone else on or want a new level of cover.

If you’re visiting from overseas, you’ll need a special policy. Getting yourself a standard policy isn’t going to be sufficient if you’re visiting or on a visa. You’ll have to sort out an Overseas Visitors Health Insurance (OVHC) plan so you’ll be covered for any necessary health services whilst in Australia.

Step-by-step guide to changing insurers.

Just to illustrate how simple it is, here are the three basic steps: To show you how easy it is, here’s three simple step to changing insurers:

1. Find the best policy for you. It might take a while, but it’ll all be worth it in the long run.
2. Cancel your old policy and sign up for the new policy.
3. Let the previous insurer know that you’ve changed policies. Stop any outgoing payments/direct debit to that insurer.
   Yes, its that easy.

If I want to change policies, what do I need to know?

Waiting periods for hospital procedures won’t be re-served. Upgrading your level of cover could mean you’d have to serve new waiting periods for the new benefits. E.g. If your old policy didn’t cover pregnancy but your new one does, you might have to serve a 12-month waiting period seeing as pregnancy cover was a new benefit.

Get more info about waiting periods in regards to extras. Being able to carry waiting periods over to a new policy for extras is not always guaranteed, so you could be waiting again if your insurer says so. However, they want you as a customer so most insurers will respect your previous waiting periods and allow you to carry them over. Just make sure you ask them nicely and they’d most likely be happy to oblige.

Inform your old health fund as well as the new, that you’re changing policies. Just in case your new health fund tries to sting you with the Lifetime Health Cover (LHC) loading, your old health fund can give them a clearance certificate so they know not to apply it to you. It also lets the new health fund know about waiting periods you’ve served and what benefits you’re immediately entitled to or are close to making claim on.

Double check you aren’t paying twice the amount. Premiums on health insurance are normally billed a month ahead of time. So, follow the necessary switching steps and your previous insurer should reimburse you if you’ve overpaid during the switch.

Figure out how much worth your loyalty bonuses have. You can bet your top dollar that your current health fund will try to keep you from switching policies. This is where loyalty bonuses can affect your final decision as your current health fund can give you a few extra perks depending on how long you stay with them. However, your new health fund isn’t required to honour your loyalty bonuses but it doesn’t hurt to ask. Although, you’ll find that the majority of health funds you sign up to will give you some sort of sign-on bonus.

You can change your mind. You’ll receive a full refund if you decide that the new health fund isn’t for you and cancel your new policy within 30 days of signing up.

How to get a better policy

Have assurance around your reason for switching. Is more value for your money what you’re looking for? Is it more affordable cover to avoid those pesky taxes? Are you having a baby? Is it extras like physio or dental that you want? Being sure of what you want will direct you in the right way to securing the best policy for your situation.

Look at all your options. Make sure you look at multiple health funds to compare the pros and cons of each policy. Its okay to contact insurers if you’re confused or have questions about their policy. We also recommend looking at their product disclosure statements (PDS) for the insurer’s policy details.

Keep an eye out for intangibles. When you’ve narrowed down your options, find out which will policy will take it a bit their offer or service a bit further to get your business. Who will honour your waiting periods you’ve already served or the loyalty bonuses you’ve had for a while? Who has health-related discounts for products services and wellness programs available? Who has the better reputation online?

Explore your options with your current insurer before switching. You never know, your insurer could be willing to give you some perks or a discount if you let them know you’ve found a new policy elsewhere. The worst that could happen is, they say no and you move on to the new policy.

Write it down. If you’ve discussed any promises with your new insurer that isn’t found in the PDS, make sure it’s written down somewhere. This could be in the form of an agreement to honour your waiting periods, extras, loyalty bonuses or discounts that were discussed during the negotiation period of your policy. If you don’t have it written down, at some point your insurer could dishonour those verbal agreements if they wanted to. It’s very unlikely to happen as they want your business, but it’s a possibility.

If you’ve just had a baby, is it a good idea to switch policies?
Your birth and related services will be covered by your pregnancy benefits. Although, if you’re wanting your new baby to have cover beyond that point, you’ll probably need to upgrade your policy to a family policy. So yes, it can be a good idea to switch at that time.

Regarding coverage for your baby, your insurer will date-back the cover to the baby’s birth and give them access to waiting periods that the primary policyholder has served, this is only possible if you add the baby to the policy within a specific timeframe. It can be around 2 months if you’re signed onto a singles/couple’s policy or up to 4 years if you’re already in possession of a family policy.

When should I switch?

If you’re looking to switch, the best time would be if you haven’t looked at your policy in a while or if your life circumstances/needs change.

Although, insurers will normally give you sign-on incentives over the year so it’s definitely worth it, as well as all the other offers that they have available for you.

●      If im pregnant, can I switch health insurance?

Well yes you can, however the portability rules are still in effect. If pregnancy cover is included in both your old and new policies, any waiting periods you’ve already served in your previous policy will be accredited to you in your new policy, meaning you won’t have to re-serve them again (unless of course there is still time left to be served).

●      What will happen if I opt to downgrade my policy while making the switch?

If your needs and life circumstances have changed and require a downgrade in your coverage, go ahead and switch. Just be aware that you’ll need to maintain enough cover to dodge the Medicare Levy Surcharge, a type of tax that’s given to high-income earners who don’t meet the standard for having sufficient private health insurance.

●      What will happen If I opt to cancel my current policy before making the switch?
If you’ve just cancelled your policy you have 7 days until your portability guarantee is no longer valid for the new policy. So, don’t get stuck waiting around too long or you’re at risk of having to re-serve all those waiting periods again. Also, you need to know that if insurers find any gaps in your cover, the Lifetime Health Cover loading could potentially reset if you’re not careful.

●      What if I can’t get out of my policy?

The reason you have the portability guarantee is to give you the free access to other health funds whenever you decide to. This essentially means that your insurer can’t force you to stay in your policy nor keep you away from others. It is possible however, to discuss and negotiate discounts from your insurer, in return you’d be paying a full year of premiums in one upfront payment. By doing this, your old insurer is legally bound to refund all premiums that go unused after you’ve made the switch, however discounted prices on premiums probably have to be paid back.