Working in this industry for as long as we have, we’ve noticed that some things never change.
The wind will always blow and your average health insurance customer still doesn’t know that you can switch health insurance and not have to wait before you are covered to the same degree of your currently held hospital and/or extras policy. No one would ever switch if new health funds imposed a period where you are not insured for the things you are now, and that would create a very stagnant market.
So, all health funds in Australia are bound by a particular set of non-negotiables within the Private Health Insurance Act of 2007 administered by APRA/PHIAC and the PHIO (the Private Health Insurance Administrative Council and the Ombudsman). One particular rule within the act is called the rule of Portability. Portability dictates that:
When you switch from one health fund to another, your new fund will request a transfer certificate from your old fund. This certificate will outline your health insurance history, including tenure with any previous funds and also the level of cover you are currently on. The new health fund will remove all waiting periods for anything that you are covered for now on your current policy – even if pre-existing.
Funds will offer portability and recognize waiting periods even if you have lapsed with your current health fund within 30-60 days. (However, there are a few funds that require you to be up to date with payments). Check with your new insurer to make sure you are within their rules of portability.
You will have to serve waiting periods for anything you are upgrading to that was not covered on your previous policy. (Makes sense).
With extras, if you are moving from a lower benefit to a higher benefit on big ticket items such as Major Dental, Hearing Aids, Orthodontics (pretty much your extras that have a standard 12 month waiting period), then the new health fund will match your benefit in the first 12 months before you get the higher benefit. eg. if you have $800 for Major Dental on your old policy and you are moving to a new policy with $1100 for Major Dental, then your new fund will match $800 in the first 12 months before it is increased. (also makes sense).
As you can see, these rules protect both the new customer and the health funds and work to keep our industry fair and competitive. Just remember that policy documents and health fund websites have to legally list all waiting periods on their product disclosures in the case that the prospective buyer is not currently insured to the same degree, and all health funds have to assume that you have waiting periods until proven otherwise when they receive your transfer certificates from the health fund you are leaving.
Understand this: no private health insurance company or broker can negotiate on the rules of portability regardless of what is written or communicated to you by any advisers or sales agents. It really is that concrete and that simple. So happy switching with your new confidence and understanding of how it all works.
Here is a link to a brochure from the Ombudsman if you would like some more detailed literature on your rights when changing health funds.
