Waiting periods and switching health funds
Switching health insurance can feel completely daunting, especially if you have concerns about waiting periods and whether your cover will lapse during the transition period. But getting to grips with the rules around waiting periods and portability can make the process much more straightforward and stress-free.
What are waiting periods in private health insurance?
Waiting periods are the timeframes during which you can’t claim certain benefits after signing up for a new policy. It’s a way to prevent people from taking out insurance only when they need it and then cancelling immediately after getting treatment. Common waiting periods include:
- 12 months for pre-existing conditions, pregnancy/obstetrics and major dental treatments.
- 2 months for general hospital cover and some extras.
- 6 months for optical and other specific extras.
When switching health funds, bear in mind that these waiting periods are subject to rules of portability, which means your cover can remain continuous.
What is portability, and how does it protect you?
Portability is a regulation under the Private Health Insurance Act 2007 that guarantees you can switch health funds without losing your current level of cover. This rule, enforced by the Office of the Commonwealth Ombudsman – aka the Private Health Insurance Ombudsman – guarantees three things:
- Transfer of cover: Your new health fund must honour the waiting periods you’ve already served with your previous fund.
- Protection for pre-existing conditions: Even if you have pre-existing conditions, your new fund can’t impose new waiting periods for equivalent cover.
- Grace period for lapsed policies: Most funds allow a grace period of 30–60 days for lapsed policies, during which time you can switch without losing portability benefits.
Ultimately, these rules support a more competitive market and give consumers the freedom to switch providers without fear of losing their cover.
How does the transfer process work?
Step 1: Request a transfer certificate
If you decide to switch health funds, your new insurer will request a transfer certificate from your previous fund. The document itself includes information like:
- The duration of your cover.
- The level of cover you held.
- Waiting periods you’ve already served.
With the transfer certificate on hand, your new fund will have all the necessary details to honour your existing cover.
Step 2: Matching your current coverage
Your new health fund will match the benefits you had under your previous policy. For example, if you had $800 in annual dental benefits, your new fund will provide the same amount for the first year before increasing it to their policy’s standard limit. Also, if you were covered for a specific treatment, such as physiotherapy, your new fund must continue covering it without tacking on additional waiting periods.
Step 3: Serving waiting periods for upgrades
If you upgrade your policy to include other benefits not covered under your previous plan, you’ll need to serve waiting periods for those new benefits. Moving from a basic extras plan, for example, to one that includes orthodontics will require you to wait 12 months before claiming orthodontic treatments.
3 common misconceptions about waiting periods and switching
- You’ll lose coverage during the switch: Many people believe they’ll have to deal with a gap in cover when switching health funds. Thanks to portability rules, this isn’t the case. Your new fund will honour your current cover and make sure there are no interruptions.
- You can negotiate waiting periods: Waiting periods are non-negotiable. Neither health funds nor brokers can waive them, as they are mandated by law.
- Switching is complicated: The process of switching is straightforward and supported by consumer protection laws. Your new fund handles most of the administrative tasks, including getting your transfer certificate.
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”
The role of the Private Health Insurance Ombudsman
The Private Health Insurance Ombudsman is in place to make sure that portability rules are upheld and protects consumers’ rights during the switching process. If you ever run into any issues, such as a delay in your transfer certificate or disputes over waiting periods, you can contact the Ombudsman for help.
Top benefits of portability for consumers
Portability rules make it easier for consumers to compare and switch health funds. This, in turn, helps support a more competitive market where insurers are motivated to deliver better value.
Without portability, people with pre-existing conditions might think twice about switching providers. The regulation guarantees they can keep their cover without serving new waiting periods. It also promotes transparency, because health funds have to clearly outline any waiting periods and benefits in their product disclosure statements.
What to watch out for when switching health funds
Grace periods for lapsed cover
While most funds will give you a 30–60-day grace period for lapsed policies, some might require you to be up-to-date with payments to retain the portability benefits. Always confirm this with your new insurer before making the switch.
Limits on extras upgrades
If you switch to a higher-level extras policy, the higher benefits might not kick in straight away. If, for example, your previous plan covered $800 for major dental and your new plan covers $1,100, you’ll still be limited to $800 during the first year.
Combined limits
Some funds will also impose combined limits on extras, meaning certain services share the same annual cap.
Our Tips for a seamless switch
- Compare policies carefully: Use online comparison tools to explore different health funds. Look for plans that meet your current and future needs without unnecessary extras.
- Ask for a pre-switch consultation: Most health funds will happily set up a consultation to help you understand how their policies align with your current cover and what waiting periods, if any, apply.
- Plan any upgrades strategically: If you’re thinking about an upgrade, start the switch well before you anticipate actually needing those new benefits. That way you’ll have served the waiting periods by the time you need to make a claim.
Conclusion
Switching health funds doesn’t have to be intimidating. With portability rules in place, you can transition seamlessly to a new provider without losing coverage or having to re-serve waiting periods for equivalent benefits. The main takeaway? Don’t let concerns about waiting periods stop you from exploring your options.
For more detailed information about portability and your rights, the Commonwealth Ombudsman has a downloadable paper on your right to change.
And when you’re ready to start comparing and switching private health insurance, Fair Health Care Alliance can streamline the entire process for you.
