There is a lot you need to consider when it comes to private health insurance.  

Sorting your way through the wide array of insurers and the bewildering number of policies in the marketplace can be an overwhelming proposition. But it can be made a little easier by following these steps, which are designed to get you thinking about what you need covered by a policy and which insurer is best placed, if any, to provide it. 

Step 1 : Choosing an insurer 

At first glance, every private health insurer looks roughly the same. But on closer examination, some fairly significant differences emerge between the various funds which may determine which insurers’ policy you choose.

Not-for-profit vs. for-profit funds 

Not-for-profit private health insurers are usually owned by their members and primarily channel their excess funds into the operation of the business and into providing a higher level of benefits to their members in the form of increased rebates. 

For-profit insurers by contrast have a primary responsibility to return a profit to their shareholders and may return lower rebate amounts. They do, however, have the same requirement as not-for-profit funds to set aside sufficient funds to maintain their business and provide benefits to their members. 

Restricted or open funds 

By definition, an open fund is available to any member of the public whereas a restricted one is only accessible by the specific grouping or industry for which it was created.  While these funds usually only cover people belonging to their target group, family members can also join in some instances. 

Use of Contracted Provider Arrangements 

A number of funds routinely sign up dentists, and in many cases entire practices, to contractual agreements through which dentists provide services to an insurer's customers in return for set rates and conditions. The insurer will then offer customers the option of using these contracted dentists in return for higher rebate returns. 

One significant downside of using a fund's contracted dentist is that you may possibly have to forgo seeing your longstanding dentist, losing out in the process on the benefit of the continuity of care they offer you. 

Step 2 : Preparing your policy shopping list 

It might be tempting once you have successfully determined which type of fund will suit you to call them up and start looking for a policy straight away. Not so fast! 

It is all too easy in that scenario to end up with a policy which sounds appealing over the phone but doesn’t offer everything you need in real life. 

So to avoid making a decision you might regret, here are some things you should consider when you’re working out the things you’ll need from a prospective policy. 

1. Do you need “extras” cover? 

The ADA believes that this type of cover, which includes everything from dental services through to physiotherapy and optical services, doesn’t really offer value for money if you’re an infrequent user of these services. On average, your rebate, which is the amount you receive back from your fund, doesn’t compensate you for the full cost of dental treatment and you may simply be better off putting money aside for these services. 

2. Find out from a prospective insurer exactly what they will and won’t cover  

While your insurer is legally obliged to supply you with a Standard Information Statement (SIS), which outlines your general entitlements, you don’t want to discover after taking out the policy that a key service you need isn’t included or faces claiming restrictions.  Additionally, the SIS doesn’t always contain sufficient detail to be sure that the service you want is covered and to what extent, so it’s worth going through the nitty-gritty of what is covered and by how much prior to signing on the dotted line. 

3. Are your circumstances likely to change in the near future 

Unless you’re some sort of amateur Nostradamus, it can be difficult to know if services you don’t currently need will become a necessary part of your cover in the near to medium future. However, some things such as planning to fall pregnant or getting an operation for a chronic condition or injury can be accounted for and should be included on the list of services you want covered. 

You may find it helpful to call one of the insurers from your short list for an exploratory Q & A but use it only as a way of further clarifying what you want from a policy and don’t commit to anything at that point. 

Step 3 : Selecting a policy 

Armed with your list of insurers and the types of services you want covered, it’s time to select a policy from the myriad possibilities out there. 

First stop should be the Private health Insurance Ombudsman website privatehealth.gov.au, which contains a series of guides to the health funds and the policies they have on offer. The information here is unbiased and detailed and can give you a good sense of the products on offer. 

You might also like to try using a comparative website that compares your entire policy. These have become popular in recent years and can help you further examine and compare appropriate policies. You will still need to cross check what they offer you against the list of policy inclusions on which you've decided.

Once again, it's usually best to only select a policy with “extras” cover if you think you will use a service frequently enough to justify the extra premiums, and remember to ask how long you have to wait to make a claim, what kinds of restrictions apply and which types of services are excluded or included. 

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