Key Takeaways
- Pre-existing conditions don’t raise your private health insurance premiums, but they do come with mandatory waiting periods before you can claim hospital benefits.
- A pre-existing condition is defined as an ailment, illness or condition where signs or symptoms were present within six months before joining or upgrading your health policy.
- Knowing the ins and outs of waiting periods and general policy terms can help you manage the costs of private health insurance.
Pre-existing conditions and the cost of health insurance
Many Australians worry about whether their medical history will affect their ability to get private healthcare or – worse – see their premiums suddenly soar. Fortunately, Australia’s Community Rating system means that everyone is on the same playing field. You’ll pay the same premium for the same level of cover, regardless of your age or health status. The only cost difference comes down to the fund you pick.
But there are a few important factors to consider around pre-existing conditions, such as waiting periods and limitations on your policy, which could impact both when you can claim and how much you’ll need to pay out of pocket.
What is a pre-existing condition?
A pre-existing condition is simply the term used to describe any ailment, illness or condition where signs or symptoms were evident in the six months before you joined or upgraded your health insurance policy. The condition needn’t have been diagnosed, nor does it need to be something you were actively treating at the time.
Let’s say you had knee pain for several months but only received an official arthritis diagnosis after getting private health insurance. In this scenario, your insurer could still consider it a pre-existing condition if medical evidence suggests that your symptoms existed before cover began.
Will having a pre-existing condition cause my health insurance premiums to rise?
Unlike in some countries where insurers charge higher premiums for people who have pre-existing conditions, Australian private health funds are legally not allowed to increase your premiums based on your health status. The Community Rating system is enforced by the Australian government to make sure that everyone pays the same price for the same level of cover – regardless of age, gender, pre-existing conditions and other factors.
But – and there is a but – there are other ways that having a pre-existing condition can hinder your efforts around getting private health insurance:
- Waiting periods: A 12-month waiting period applies for hospital cover related to pre-existing conditions.
- Policy limitations: Some lower-tier policies won’t include treatments for chronic or complex conditions, which could mean you have to foot higher bills for out-of-pocket costs.
- Extras: While pre-existing conditions don’t technically impact extras cover, you will still face standard waiting periods for expensive treatments like major dental or ongoing physiotherapy sessions.
How waiting periods factor into pre-existing conditions
A waiting period is the amount of time you’ll need to wait before you are able to claim benefits for treatments under your health insurance policy. For pre-existing conditions, insurers enforce a 12-month waiting period before they start covering your hospital treatment costs. This applies whether you’re a new policyholder or upgrading to a higher level of cover.
However, exceptions to this rule do include:
- Psychiatric care, which has a 2-month waiting period (you might also be eligible for a waiver if you’re upgrading your mental health cover).
- Rehabilitation services, which have a 2-month waiting period.
- Palliative care, which also has a 2-month waiting period.
How it works: Let’s say you signed up for private hospital cover at the start of the year (1 January 2025) and later need surgery for a pre-existing condition. You’ll need to wait until next year (1 January 2026) before your insurer will cover the procedure. During this waiting period, though, you can still receive treatment in public hospitals through Medicare, but you will no doubt face much longer wait times for elective procedures.
Portability
Don’t re-serve waiting periods when you switch to a new health fund or policy
“John was immediately covered for a hip replacement in private hospital because he had already served his waiting periods for joint replacements on his old policy”
How do insurers decide if a condition is pre-existing?
The good news is that health insurers don’t make this decision on their own. Instead, they have to appoint an independent medical advisor to review your case. Your advisor will look at your medical records and get opinions from your treating doctors to decide whether any signs or symptoms of your condition were present in the six months prior to taking out or upgrading your current policy.
Here’s what’s most important: you don’t need to have been diagnosed with the condition for it to be considered pre-existing. If a reasonable GP could have identified the condition based on symptoms, your insurer will most likely classify it as pre-existing.
4 tips for managing health insurance costs with a pre-existing condition
1. Choose the right level of cover
Health insurance policies come in varying levels of cover. With Bronze or Basic plans, for example, you won’t get covered for treatments around chronic illnesses and major surgeries, meaning you could be left with huge out-of-pocket expenses.
Silver and Gold policies, on the other hand, cover a much broader range of services, including treatments for conditions like cancer, joint replacements and cardiac procedures – but they also come with higher premiums.
2. Work out whether you need extras
Extras cover gives you benefits for common allied health services like physiotherapy, chiropractic care, dental, optical and mental health support. While pre-existing conditions don’t impact your premiums here, standard waiting periods do apply:
- 2 months – General dental, optical, physiotherapy, etc.
- 12 months – Major dental, hearing aids, orthodontics, etc.
If your pre-existing condition requires ongoing therapy, think about investing in a policy with higher extras benefits to minimise your out-of-pocket costs.
3. Choose a higher excess
Paying a higher excess (the amount you pay before insurance kicks in) can lower your monthly premiums. Just remember that if you anticipate you’ll be visiting the hospital quite regularly in the coming months, then a lower excess might be more cost-effective in the long run.
4. Take advantage of government rebates
The private health insurance rebate helps offset your insurance costs, with subsidies ranging from 0% for very high earners right up to 32.812%, depending on your age and income.
- Singles earning under $97,000 and families under $194,000 qualify for the full rebate.
- Higher earners receive reduced rebates according to their tier (i.e. Base, Tier 1, Tier 2 and Tier 3).
Common myths about pre-existing conditions and health insurance
- Myth #1: Pre-existing conditions make private health insurance more expensive.
- False: Premiums are the same for everyone, regardless of your medical history.
- Myth #2: Extras cover has waiting periods for pre-existing conditions.
- False: Extras cover waiting periods apply to all policyholders equally and are not based on pre-existing conditions.
- Myth #3: You can claim hospital benefits for pre-existing conditions immediately.
- False: A 12-month waiting period applies to hospital cover for pre-existing conditions.
Summary
If you have a pre-existing condition, private health insurance can still be an incredibly valuable resource that gives you better treatment options and a greater choice of doctors and hospitals. Just make sure you choose the right level of cover and take advantage of government rebates to help you manage costs to the best of your ability.
Before choosing a policy, it’s well worth comparing your options and speaking with a private health insurance expert to make sure your preferred policy will give you the best cover for your current circumstances. Need help finding the right policy? Compare health insurance with Fair Health Care Alliance today.
FAQ's
Yes, all Australian health funds must accept you, but a 12-month waiting period applies for hospital claims.
No. Under the Community Rating system, everyone pays the same premiums for the same level of cover.
You can still get treatment via the public system (i.e. Medicare), but you will have to stand at the end of the queue – and public hospitals have much longer wait times than private facilities.
No, but standard waiting periods apply to services like dental and physio.
