Before diving into this article, please note that I am not a ‘financial anything’ , and I am not licenced in ‘financial anything’, so technically I’m not allowed to give you advice about health insurance. However, if it interests you to know my anecdotal experience of health insurance as both a health practitioner and Allied health practice owner for many years, read on.
This article is not financial advice, nor should it be read as such.
They say spending 10,000 hours working at a thing makes you a master. If this is true, then I am a master of understanding health insurance.
It’s funny, isn’t it, the things we accidentally fill our brains up with!
In our practice, we spend a great deal of our time each day processing health insurance claims for various Allied and complementary therapies, including chiropractic, acupuncture, psychology and remedial massage. All of these attract a rebate under most funds’ ‘Extras’ health insurance.
In some cases, the rebate is almost the whole appointment fee and the client smiles joyfully and immediately books their next massage.
In others, the client gets a measly $12 back on a $120 appointment. I see their disappointment, and in spite of the rules that say I can’t discuss health insurance options with clients because I’m not a financial planner, I give them my best tip:
(I don’t like rules.)
At this point I’d like to remind you that these are my lived observations of how Extras health insurance works to either help clients of Allied and complementary therapies, or shaft them. This is not professional advice, and you should definitely consider your own circumstances before buying or changing your health insurance.
Your next steps might be to ask a professional for more info, do the sums yourself, and definitely read the PDS.
How does Health Insurance work in Australia?
In this country, we have 2 different types of Health insurance: Hospital and Extras.
Hospital cover is… well, for visits to the hospital, obviously. Planned and unplanned illness and accidents and ouchy/debilitating-stuff-going-on-in-your-body-that-requires-the-big-guns.
Extras cover is like ‘mini problem cover’ for when you don’t need a hospital but you DO need some proper care. Extras insurance helps you cover the cost of private treatment and rehabilitation for an unexpected illness or injury. In many cases, working with a skilled therapist in private practice can get our mental or physical being back on track before we get to ‘the hospital’ stage.
FYI, I’m not going to talk about Hospital insurance here at all. I don’t know much about it, and I hope I’ll never have to spend much time dealing with it. In my practice, we are purely involved in processing claims using clients’ health insurance ‘Extras’.
How does Extras cover work?
Extras covers ‘Allied health services’, which are nuts-and bolts kinda therapies; recognised but not paid for by Medicare, like:
and, in some packages, ‘complementary’ therapies are covered, too, such as:
Is Extras cover worth it?
Here’s the simple answer: it’s worth it if you use it.
I talk with people about their Extras health insurance all day long. I see their happy faces and sad faces.
The consistently happy faces belong to people who have great Extras cover, get regular treatment – chiro, massage, acupuncture – and receive a decent rebate. Those guys never regret paying for Extras cover.
These are the people who come monthly for a remedial massage because they know it’s good for their mental and physical health, plus they love the chats and cups of tea.
When these people choose to take out Extras insurance, they know that they’ll claim all of their allocated funds over the course of the year and this will cover the cost of the premium.
Having Extras and getting rebates on your therapies is bound to make you have a happy face if you’re someone who makes a regular thing out of caring for your health.
In contrast, the people who make sad faces at payment time are the ones who either:
- Have decent Extras that costs them a bit and they never use it
- Have terrible Extras cover that gives them a pittance as a rebate
Sometimes I ask people how often they have a massage or go to the chiropractor, they tell me it was last year and when I look it up it was actually three years ago. For these guys, taking out Extras cover would be a waste. Sure, they could have an injury and need to have a bunch of treatment. But the money they’d saved on their premiums for all the years they never sought routine care would cover the amount they’d get back in their rebates.
Rebates are limited and every fund has different limits for different therapies. But be assured, if you need $1000 worth of physio, you are not going to get that all covered by your insurer. The limits are usually a few hundred dollars for each type of therapy.
This is why you need to be sure you’re going to use a few different things. Otherwise, you may as well pay out-of-pocket.
How to Save Money on Your Health Insurance
If you’ve decided to bite the bullet, how do you choose a good Extras cover?
Extras health insurance – just like hospital cover – is tiered, which means that there is basic cover with a low cost premium and low rebates and then the cover steps up from there in increments. There’s a medium cover with most insurers, and then you get to the top shelf , super duper cover that usually costs the bomb – but the rebates are often pretty good, too.
It’s bamboozling, so it’s important to seek expert advice or read the PDS for the product that you’re buying.
There are a few secrets to getting the best cover and then getting the most out of it. Here are the ones I know. Remember, this is not financial advice, but practical observation about how I see this work (or not) in people’s favour (or not) in my health practice.
You can split up your Hospital and Extras cover
No kidding, every other person I have this conversation with seems to be under the impression that they have to have their Hospital and Extras cover with the same company. This is not true. You can split ‘em up!
Shop around. Compare. Some companies offer awesome, well-priced hospital cover, and others offer awesome, well-priced Extras cover with loads of scope for claiming rebates on important therapies.
DO NOT ASSUME that if your Hospital cover is whiz bang, your Extras from the same company will be, too.
They’re tricky, insurance companies. Some of them are leaning very hard on being the oldest in the market, or the biggest. Most of them don’t want you to do your homework.
You’re unlikely to be getting any cost-benefit for holding Hospital and Extras with the same insurer
Lots of folks think they’re getting a discount. They’re usually not.
Consider and compare both the POOL of funds available to be claimed for the therapies you use, plus the INDIVIDUAL SESSION REBATE amount
For example, if you see the chiropractor and each session costs $70, Cover A might offer an $800 limit for Chiropractic over the year, and Cover B might offer $400.
On the face of it, Cover A seems like the best choice if I like going to my Chiropractor.
However… if Cover A offers a $12 rebate on Chiropractic visits, and Cover B offers a $35 rebate, which one is more likely to cover more of your costs over the year?
You’d have to see the chiropractor 66 times to claim your whole pool of funding back.
This gets more complex (especially if your maths brain is like mine) when you consider that some insurers offer a percentage rebate rather than a set amount.
Our clients generally find that they can choose the right insurer for them when they work out what rebates are offered on the therapies they actually use per year, then compare those values.
One thing I notice over and over is that when people stand at our reception desk and finalise their payment, they have a feeling response to how their private health insurance has worked out for them.
When clients feel like they’re getting a raw deal on their Extras insurance, I quietly nod in my mind and go ‘uh huh’, because I know that the next person gets a better deal.
When clients punch the air – Tom Cruise-style – in response to the awesome rebate they got on their session, I’m happy for them because they chose a good cover.
If you’re not air-punching, shop around.