Health and wellbeing blogs

Health fund common terms

Health insurance can be difficult to understand when preparing for your hospital visit. 

Group of caregivers with patient in bed

There are many benefits to having private health insurance. Some of these benefits include being able to select your doctor. In many instances, private health cover often reduces the waiting period for elective surgery as the procedure can be carried out in a private hospital.

Whatever your reasons for taking out private health insurance, it’s important to understand your level of cover so that you can ensure that it suits your needs and maximises value for money. 

Below are some common terms that are used when discussing health insurance and your level of cover. 

If you are ever in doubt about your level of cover for a procedure at our hospital, we strongly encourage you to check with your health fund and doctor’s rooms in the first instance for more information. 
 
The minimum benefit (sometimes called the "default" benefit) is the lowest amount that a health insurer is permitted to pay for a hospital admission that is included on policy. It is equivalent to the amount a public hospital would charge a private patient for a shared room, usually as an all inclusive daily rate of approximately $250-$300 depending on where you are in Australia.

If you are entitled to only the minimum benefit and are attending a private hospital, the extra charges you will need to pay yourself include the amount above what the hospital charges for accommodation as well as theatre or labour ward plus any fees for medical services and other items such as pharmaceuticals that aren’t covered by your insurer.

The cost of theatre or labour ward in a private facility depends on the complexity of the procedure being performed and can range from a couple of hundred dollars to several thousand dollars. If you are proceeding with private hospital treatment and are only entitled to a minimum benefit, it is strongly recommended that you obtain a quote from the hospital and medical practitioners before admission.
Conditions or services which your health insurance policy does not include, meaning that your insurer will not pay benefits towards hospital or medical costs for these items. If you choose to proceed as a private patient for an excluded service, you will have very large out of pocket expenses. If the services are eligible under Medicare, you can still receive treatment as a public patient – however, public hospital waiting lists will apply and you should discuss this option with your doctor. For more information, see: Private health insurance, Factsheet - Policy Exclusions and Restrictions
 
Condition or services which this insurance policy covers to a limited extent, and will pay reduced benefits on hospital admissions. It is not sufficient to cover the cost of a private room in a public hospital or any room in a private hospital. If you are admitted to a private hospital for treatment that is restricted by your policy, large out of pocket expenses will apply. You will have to pay the full theatre fees and other costs as well as the difference for accommodation fees; in some cases theatre fees can exceed the cost of accommodation. If the services are eligible under Medicare, you can still receive treatment as a public patient – however, public hospital waiting lists will apply and you should discuss this option with your doctor. For more information, see: Private health insurance, Factsheet - Policy Exclusions and Restrictions
 
A pre-existing condition is an ailment, illness or condition, the signs or symptoms of which, in the opinion of a medical practitioner appointed by the health insurer, existed at any time during the six months prior to taking out hospital cover or upgrading to a higher level of cover. Health insurers are able to impose a maximum 12 month waiting period for hospital treatment for ailments, illnesses or conditions that are considered to be pre-existing. For psychiatric care, rehabilitation and palliative care, the maximum waiting period is two months, even if the condition is pre-existing. If you are going to hospital during your waiting period, it is important to check with your health insurer prior to the admission as to whether you will be covered or if the condition will be deemed pre-existing.
Also called a front-end deductible, an excess is an amount that you agree to pay towards the cost of hospital treatment, in exchange for lower premium costs.
You may be required to pay an excess every time you go to hospital, or only the first time. Depending on the type of hospitalisation (e.g. day surgery or overnight stays) you may only have to pay a part excess (for example an excess of $500 may apply to overnight hospitalisation but only $100 applies to day surgery.)
What excess (if any) you will need to pay depends on the policy you take out. Always check with your insurer.
For a hospital policy a co-payment is a set amount that you agree to pay for each day you are in hospital, in exchange for lower premiums. For example, you may agree to pay the first $50 per day in hospital. Most co-payments have a limit on the number of days they apply per stay. It can also be called an overnight excess, daily excess or patient moiety.
For a general treatment (also known as Extras or Ancillary) policy you may be required to pay a co-payment for some services before a benefit will be paid. For example, it is common for pharmacy items to require a co-payment of the equivalent to the amount listed for the items on the Pharmaceutical Benefits Scheme (PBS)
Always check with your insurer about what co-payments you may need to pay.
A payment per night for a private room, when the policy only covers for a shared room.